Value Line Expands Asset Management Amid Declining Research Demand

Value Line is growing its asset management services as demand for its research wanes. The company's flagship publication, the Value Line Investment Survey, has been in production for nearly 100 years and is widely recognized as a leading source of investment information. Despite declining demand for its research, Value Line is expanding its asset management services to meet the needs of its clients.

Value Line (NASDAQ: VALU), a longstanding financial services and investment research firm, is pivoting its business strategy to focus more on asset management as demand for its traditional research services wanes. Founded in 1931, the company's signature publication, the Value Line Investment Survey, has been a cornerstone in the investment community for nearly a century. Despite its enduring reputation, the company has been facing declining demand for its research publications, leading to a decrease in subscription fees and overall revenue.

In response to this shift, Value Line has been expanding its asset management services through EULAV Asset Management. This division serves as the investment advisor to its mutual funds and portfolios, generating significant income for the company. In FY 2025, Value Line reported earnings of $2.20 per share, with total net income of $20.7 million, an 8.8% increase from FY 2024 [1]. This growth is largely attributed to the increasing revenue from EULAV, which totaled $18.3 million in FY 2025, a 37.9% increase from the previous year [1].

While the company's traditional revenue streams from print and digital publications have been declining, the asset management arm has been a bright spot. In FY 2025, the equity fund assets under management (AUM) increased by 16.0% with inflows outpacing outflows by 16.0% [1]. This growth, however, is not solely driven by new inflows but also by market value changes.

Value Line has also been focusing on returning cash to shareholders. In April 2025, the company increased its quarterly dividend from $0.30 to $0.325, bringing the annual dividend to $1.30 [1]. This marks the 11th consecutive year of dividend increases, with a five-year average growth rate of almost 9% [1].

Despite these positive developments, Value Line's stock has not performed well. The stock has lost over 27% since January 1, 2025, even as the overall market has reached new record highs [1]. This decline can be attributed to the continued decline in publication revenue, which is being weighed down by the increased focus on asset management.

The company's future success will depend on its ability to maintain and grow its asset management business. While the traditional research business is declining, the company is positioning itself as a viable asset manager, similar to firms like Janus Henderson (JHG), Franklin Resources (BEN), and Invesco (IVZ). However, these stocks trade at lower PE multiples, making VALU look slightly overvalued at the current time.

Risks to consider include the potential for outflows from EULAV funds if returns do not match those of other asset managers, adverse market conditions, and prolonged poor returns, which could lead to redemptions and decreased income.

In conclusion, Value Line is adapting to the changing investment landscape by expanding its asset management services. While the company faces challenges in its traditional research business, its focus on asset management and shareholder returns offers promising prospects for the future.

References:
[1] https://seekingalpha.com/article/4814242-value-line-grows-its-asset-management-services-as-demand-for-research-wanes