Why Central Securities is back on investors’ radar

Central Securities (CET) recently published its Report to Stockholders for the first quarter of 2026, highlighting changes in net assets and net assets per common share compared with the same period a year earlier.

This fresh data provides an updated snapshot of the closed end fund’s balance sheet and share base. This information can be useful if you are comparing current pricing with the value of the underlying portfolio.

The release of the first quarter 2026 stockholder report has come alongside a 7.23% 1 month share price return and a 4.97% year to date share price return, while total shareholder returns of 26.08% over 1 year and 83.20% over 3 years show a pattern of strong performance over these periods.

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With CET trading at a reported intrinsic discount of around 65%, the key question now is whether you are looking at a genuine value gap or whether the recent gains simply reflect markets already pricing in future growth.

Price to earnings of 5.9x: Is it justified?

CET’s P/E of 5.9x against a last close of $53.25 screens as cheap compared with both its Capital Markets peers and the wider US industry average.

The P/E ratio links what you pay per share to the earnings that the fund generates. For an investment company like Central Securities, a low P/E can indicate that the market is assigning a cautious label to its earnings power, even though the business description shows a diversified mix across equities, bonds, convertibles, options and other securities in the US market.

Here, the gap is wide. CET’s 5.9x P/E is well below the US Capital Markets industry average of 41.9x and also below the peer average of 7.7x. That kind of discount shows that investors are pricing CET’s earnings much more conservatively than the sector as a whole. This is despite the company reporting earnings growth of 8.1% per year over the past 5 years and a reported Return on Equity of 14.8%, which is described as low relative to a 20% threshold.

The Simply Wall St DCF model currently values CET at $153.15 per share compared with the $53.25 market price. This indicates a large gap between modeled cash flows and what the market is willing to pay today. The model works by projecting future cash flows and discounting them back to today’s value, which can be useful when near term earnings contain large one off items or do not reflect a steady run rate.

For Central Securities, recent results include a $240.9m one off gain that affects the last 12 months of earnings, alongside a reported 7.9% earnings decline over the past year. Using a DCF framework in this context can give a different reference point than headline profit alone. However, there is insufficient public forecast data on earnings and revenue growth, and there is no analyst price target, so any cash flow based estimate should be treated as one input among several rather than a precise anchor.

Result: Price to earnings of 5.9x (UNDERVALUED).

However, a reported $240.9m one off gain and limited forecast data mean CET’s recent earnings and DCF outputs could give a less reliable picture than usual.

Another angle on CET’s valuation

The earlier P/E work presents CET as inexpensive, but the SWS DCF model goes further, estimating fair value at $153.15 per share versus a $53.25 market price. That gap suggests very different views of what CET’s future cash flows are worth, so which signal should be trusted more?

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Central Securities for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 51 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

With mixed signals across valuation metrics and recent results, the real question is how this all stacks up in your own playbook. Take a closer look at the underlying data, recent reports and peer comparisons, then weigh the 1 key reward and 3 important warning signs

Looking for more investment ideas?

If CET does not fully match your checklist, do not stop here. Broaden your search across other themes that could fit your goals and risk comfort.

• Target potential mispricings by scanning for quality companies trading below their estimated value with the help of 51 high quality undervalued stocks
• Strengthen your income focus by checking out companies that offer higher yields and consistent payouts through the 12 dividend fortresses
• Prioritise capital protection by reviewing companies that score well on resilience and risk metrics using the 74 resilient stocks with low risk scores

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.