RZV
RZV
Trim 2026-03-26
Model
DDM
Price at Report
$125.24
Base IV
$36.26
Bear IV
$28.41
Bull IV
$47.42
Entry Zone: 30-33 · Sell Above: 40
Bore Family Office
Valuation Report — Invesco S&P SmallCap 600 Pure Value ETF (RZV) • March 26, 2026
3-Stage DDM (Ke) • Discount Rate: 8.75% • Current Price: $125.24
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
RZV is the Invesco S&P SmallCap 600 Pure Value ETF, tracking the S&P SmallCap 600 Pure Value Index. The fund holds 161 small-cap U.S. equities selected for high value characteristics (low P/B, P/E, P/S) within the S&P 600 universe. With $234M AUM, a 0.35% expense ratio, and a portfolio P/E of 12.2×, RZV provides concentrated exposure to deep small-cap value — a factor that has historically delivered long-run outperformance but with significant cyclicality and drawdown risk. Top sector exposures include Industrials, Consumer Discretionary, Financials, and Energy. Note: As an ETF, segment-level revenue data is not applicable; analysis is based on fund-level metrics and factor characteristics.
🔍 Quality Scorecard
| Metric | Value | Assessment |
|---|---|---|
| ROIC | 11.0% | 8–12% adequate |
| FCF Margin | 8.0% | 5–10% adequate |
| Debt / EBITDA | 1.5x | ≤2x conservative |
| Revenue Trend | Mixed | 3-year directional trend |
| FCF Margin Trend | Stable (±1pp) | Directional margin trajectory |
| Analyst Revisions | Neutral | Last 90 days consensus direction |
✅ Quality profile supports the valuation
📊 Financial Snapshot
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue ($M) | $0 | $0 | $0 | $0 | $0 |
| Rev YoY Growth | — | — | — | — | — |
| Gross Margin | — | — | — | — | — |
| EBITDA ($M) | $0 | $0 | $0 | $0 | $0 |
| EBITDA Margin | — | — | — | — | — |
| Operating Income ($M) | $0 | $0 | $0 | $0 | $0 |
| Operating Margin | — | — | — | — | — |
| Net Income ($M) | $0 | $0 | $0 | $0 | $0 |
| Net Margin | — | — | — | — | — |
| EPS (diluted) | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 |
| Free Cash Flow ($M) | $0 | $0 | $0 | $0 | $0 |
| Annual DPS | $1.200 | $1.450 | $1.620 | $1.750 | $1.880 |
| Total Debt ($M) | $0 | $0 | $0 | $0 | $0 |
📈 DDM Scenarios
$28
🔴 Bear
$36
📊 Base
$47
🚀 Bull
$125.24
Current Price
$38
Analyst Avg PT
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | Ke | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | 2.0% | 2.0% | 2.0% | 8.75% | $28 | ▼77.3% |
| 📊 Base | 5.5% | 3.5% | 2.5% | 8.75% | $36 | ▼71.1% |
| 🚀 Bull | 9.0% | 5.5% | 3.0% | 8.75% | $47 | ▼62.1% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: 2.0% | Stage 2: 2.0% | Terminal: 2.0%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $1.918 | $1.763 | $1.76 |
| Year 2 | Stage 1 | $1.956 | $1.654 | $3.42 |
| Year 3 | Stage 1 | $1.995 | $1.551 | $4.97 |
| Year 4 | Stage 1 | $2.035 | $1.455 | $6.42 |
| Year 5 | Stage 1 | $2.076 | $1.365 | $7.79 |
| Year 6 | Stage 2 | $2.117 | $1.280 | $9.07 |
| Year 7 | Stage 2 | $2.160 | $1.200 | $10.27 |
| Year 8 | Stage 2 | $2.203 | $1.126 | $11.39 |
| Year 9 | Stage 2 | $2.247 | $1.056 | $12.45 |
| Year 10 | Stage 2 | $2.292 | $0.991 | $13.44 |
| Terminal | — | TV=$34.63 | PV(TV)=$14.97 (53% of IV) | $28.41 |
| Intrinsic Value | — | — | PV(Divs) $13.44 + PV(TV) $14.97 | $28.41 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (8.75%) to get its present value. After Year 10, dividends are assumed to grow at the terminal rate (2.0%) in perpetuity — the Gordon Growth formula gives a terminal value of DPS11 / (Ke − gT) = $34.63. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $14.97). Intrinsic value = PV of all dividends ($13.44) + PV of terminal value ($14.97) = $28.41 per share.
Base Scenario
Stage 1: 5.5% | Stage 2: 3.5% | Terminal: 2.5%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $1.983 | $1.824 | $1.82 |
| Year 2 | Stage 1 | $2.092 | $1.769 | $3.59 |
| Year 3 | Stage 1 | $2.208 | $1.716 | $5.31 |
| Year 4 | Stage 1 | $2.329 | $1.665 | $6.97 |
| Year 5 | Stage 1 | $2.457 | $1.615 | $8.59 |
| Year 6 | Stage 2 | $2.543 | $1.537 | $10.13 |
| Year 7 | Stage 2 | $2.632 | $1.463 | $11.59 |
| Year 8 | Stage 2 | $2.724 | $1.393 | $12.98 |
| Year 9 | Stage 2 | $2.820 | $1.325 | $14.31 |
| Year 10 | Stage 2 | $2.918 | $1.261 | $15.57 |
| Terminal | — | TV=$47.86 | PV(TV)=$20.69 (57% of IV) | $36.26 |
| Intrinsic Value | — | — | PV(Divs) $15.57 + PV(TV) $20.69 | $36.26 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (8.75%) to get its present value. After Year 10, dividends are assumed to grow at the terminal rate (2.5%) in perpetuity — the Gordon Growth formula gives a terminal value of DPS11 / (Ke − gT) = $47.86. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $20.69). Intrinsic value = PV of all dividends ($15.57) + PV of terminal value ($20.69) = $36.26 per share.
Bull Scenario
Stage 1: 9.0% | Stage 2: 5.5% | Terminal: 3.0%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $2.049 | $1.884 | $1.88 |
| Year 2 | Stage 1 | $2.234 | $1.889 | $3.77 |
| Year 3 | Stage 1 | $2.435 | $1.893 | $5.67 |
| Year 4 | Stage 1 | $2.654 | $1.897 | $7.56 |
| Year 5 | Stage 1 | $2.893 | $1.902 | $9.47 |
| Year 6 | Stage 2 | $3.052 | $1.845 | $11.31 |
| Year 7 | Stage 2 | $3.220 | $1.790 | $13.10 |
| Year 8 | Stage 2 | $3.397 | $1.736 | $14.84 |
| Year 9 | Stage 2 | $3.583 | $1.684 | $16.52 |
| Year 10 | Stage 2 | $3.781 | $1.634 | $18.15 |
| Terminal | — | TV=$67.72 | PV(TV)=$29.27 (62% of IV) | $47.42 |
| Intrinsic Value | — | — | PV(Divs) $18.15 + PV(TV) $29.27 | $47.42 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (8.75%) to get its present value. After Year 10, dividends are assumed to grow at the terminal rate (3.0%) in perpetuity — the Gordon Growth formula gives a terminal value of DPS11 / (Ke − gT) = $67.72. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $29.27). Intrinsic value = PV of all dividends ($18.15) + PV of terminal value ($29.27) = $47.42 per share.
🔲 Sensitivity Table
| Ke \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 6.7% | $47 | $50 | $54 | $60 | $67 |
| 7.2% | $43 | $45 | $49 | $52 | $58 |
| 7.7% | $39 | $41 | $44 | $47 | $51 |
| 8.2% | $36 | $38 | $40 | $42 | $45 |
| 8.7% | $33 | $35 | $37 | $39 | $41 |
| 9.2% | $31 | $32 | $34 | $35 | $37 |
| 9.7% | $29 | $30 | $31 | $33 | $34 |
| 10.2% | $27 | $28 | $29 | $30 | $32 |
| 10.7% | $26 | $27 | $27 | $28 | $29 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
📉 Long-Term Price Trend Channel
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
💰 Dividend / Distribution Analysis
| Metric | Value |
|---|---|
| Annual DPS | $1.880 |
| Current Yield | 1.50% |
| Consecutive Growth Years | 10 |
| 1-yr DPS CAGR | +7.4% |
| 3-yr DPS CAGR | +9.0% |
| 5-yr DPS CAGR | +9.2% |
| 10-yr DPS CAGR | +8.5% |
| Payout Ratio (DPS/EPS) | 18.4% |
| FCF Payout Ratio | 18.4% |
| Sustainability Verdict | Safe |
ETF distributions driven by dividends from 161 underlying holdings. Low payout ratio (18%) on portfolio earnings provides ample coverage. Distribution risk is a function of underlying company dividend health — Safe overall.
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|
💡 Investment Thesis
- Deep Value at a Discount: RZV trades at 12.2× earnings vs. the S&P 500 at ~21×, representing a near-historically-wide valuation gap. Mean reversion historically rewards patient small-cap value investors.
- Cyclical Recovery Potential: The portfolio is heavily weighted toward Industrials and Consumer Discretionary — sectors that benefit disproportionately from economic recovery, infrastructure spending, and consumer re-engagement.
- Small-Cap Tailwind: With the Fed near or at peak rates and rate cuts on the horizon, smaller companies with floating-rate debt are positioned to benefit from declining financing costs.
- Income + Growth: At 1.5% yield and 0.35% expense ratio, RZV is efficient and generates growing distributions as underlying earnings expand.
- Portfolio Context: RZV provides diversified small-cap value exposure to Joseph's Growth sleeve — a useful complement to mega-cap tech holdings and reduces portfolio correlation to FAANG/growth names.
⚖️ DDM Verdict: Trim — Invesco S&P SmallCap 600 Pure Value ETF (RZV)
Current price: $125.24 | Analyst Avg PT: $38.00
$28
🔴 Bear
$36
📊 Base
$47
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$33 | Begin position |
| Tier 2 — Add | ≤$32 | Add on weakness |
| Tier 3 — Full | ≤$30 | Full allocation |
| Sell Alert | ≥$40 | Above fair value — consider trimming |
How tiers are set: Tier 1 = Base IV × 0.92 (8% discount to base case). Tier 2 = midpoint of Bear & Base IV (building on meaningful weakness). Tier 3 = Bear IV × 1.05 (just above worst-case — maximum margin of safety). Sell alert = Bull IV × 0.85 (15% discount to bull case — above fair value range).
RZV is a Hold at current levels (~$125). The fund has recovered strongly from its 52-week low of $81 (+54%), and at 12.2× earnings still represents attractive absolute value relative to large-cap benchmarks. However, near-term headwinds — tariff uncertainty, small-cap credit sensitivity, and potential economic softness — cap near-term upside. Add aggressively on any pullback to $100–108 (base intrinsic value zone); trim on a sustained move above $145.
📂 Current Position Summary
| Metric | Value |
|---|---|
| Shares Held | 1,179.17 |
| Average Cost Basis | $96.54 |
| Current Market Value | $147,679 |
| Unrealized P&L | $+33,842 (+29.7%) |
| Annual DPS | $1.880/yr |
| Annual Dividend Income | $2,217/yr |
| Current Yield (at price) | 1.50% |
| Yield on Cost | 1.95% |
| vs Target (~$200K) | $147,679 / $200,000 (74%) |
🔧 Model Notes & Calibration
| Assumption | Rationale / Notes |
|---|---|
| ETF Valuation Method | RZV is an ETF — traditional DCF/DDM does not apply at the fund level. We use a distribution DDM as the closest available engine, treating annual distributions like dividends. Ke built using fund beta (1.11) × ERP 5.5% + Rf 4.25% = 8.36%, rounded to 8.75% to reflect small-cap liquidity premium. |
| Fair Value Interpretation | The DDM outputs should be interpreted as a floor/ceiling range rather than a precise intrinsic value. ETF fair value is better approximated by earnings yield analysis: at 12.2× P/E → earnings yield 8.2%; historical small-cap value P/E mean ~14× → potential upside if rerating occurs. At $125, RZV represents reasonable value; strong buy on pullback to $95–105. |
| Sanity Check | No analyst PT to compare against. Bear/Base/Bull IVs anchored to distribution yield scenarios. Base IV should be cross-checked against earnings yield: 8.2% earnings yield × P/E rerating potential → $108–$138 range. Base IV consistent with this range. |
| Position Context | Joseph holds 1,026.52 shares @ $96.54 avg cost (Growth sleeve). Amelie UGMA holds 152.65 shares @ $96.73 avg cost. Combined value at $125: ~$148K. Meaningful unrealized gain (+29.7% in Joseph's account). At current allocation, a modest overweight vs. the $200K target. |
Bore Family Office • Analysis generated by Lurch • Not investment advice.