Capitol Federal Financial, Inc. (NASDAQ: CFFN)

Sector: Financial Services Industry: Banks - Regional CIK: 0001490906
Market Cap 894.79 Mn
P/B 0.85
P/E 13.15
P/S 4.47
ROIC (Qtr) 2.18
Div Yield % 6.21
Rev 1y % (Qtr) 16.88
Total Debt (Qtr) 2.02 Bn
Debt/Equity (Qtr) 1.92

About

Capitol Federal Financial, Inc. (CFFN) is a Maryland corporation operating in the financial services industry. The company, through its wholly-owned subsidiary, The Bank, provides a variety of financial services to meet the needs of the communities it serves. Headquartered in Topeka, Kansas, The Bank is a federally chartered and insured savings bank with a wide network of traditional branches, retail in-store locations, and online and mobile banking platforms. The company's primary business activities revolve around the origination of one- to four-family...

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Price action

Investment thesis

Bull case

  • Operating cash flow of 55.04M provides strong 39.43x coverage of stock compensation 1.40M, indicating sustainable incentive practices.
  • Strong tangible asset base of 9.78B provides 4.85x coverage of total debt 2.02B, indicating robust asset backing and low credit risk.
  • Robust free cash flow of 49.88M exceeds capital expenditure of 5.16M by 9.67x, indicating strong organic growth funding capability.
  • Operating cash flow of 55.04M provides strong 26.77x coverage of tax liabilities 2.06M, showing excellent fiscal position.
  • Cash reserves of 252.44M provide comfortable 122.78x coverage of tax obligations 2.06M, showing strong fiscal management.

Bear case

  • Operating cash flow of 55.04M barely covers its investment activities of (206.59M), with a coverage ratio of -0.27, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 55.04M provides thin coverage of dividend payments of (44.25M) with a -1.24 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Free cash flow of 49.88M represents just -0.22x of debt issuance (226.65M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Retained earnings of (87.33M) provide limited buffer against comprehensive income items of 15.76M, which is -5.54x, indicating elevated exposure to market risks.
  • Operating cash flow of 55.04M is outpaced by equity issuance of (3.89M) (-14.16 ratio), indicating concerning reliance on equity markets for funding operations.

Peer comparison

Companies in the Banks - Regional
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 USB Us Bancorp \De\ 84.44 Bn 12.40 3.25 77.98 Bn
2 PNC Pnc Financial Services Group, Inc. 84.36 Bn 13.61 3.73 62.34 Bn
3 NU Nu Holdings Ltd. 81.47 Bn 32.21 5.79 4.49 Bn
4 NWG NatWest Group plc 66.53 Bn 9.88 3.05 169.04 Bn
5 TFC Truist Financial Corp 64.60 Bn 13.18 3.53 71.11 Bn
6 MTB M&T Bank Corp 32.73 Bn 12.47 3.60 14.99 Bn
7 FITB Fifth Third Bancorp 31.96 Bn 14.15 3.93 18.94 Bn
8 FCNCA First Citizens Bancshares Inc /De/ 28.98 Bn 12.78 3.26 40.00 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.29 0.14
EV to Cash from Ops. EV/CFO 51.42 7.21
EV to Debt EV to Debt 1.40 5.20
EV to EBIT EV/EBIT 34.09 14.98
EV to EBITDA EV/EBITDA 31.19 8.92
EV to Free Cash Flow [EV/FCF] EV/FCF 56.74 8.87
EV to Market Cap EV to Market Cap 3.16 1.04
EV to Revenue EV/Rev 14.13 -3.76
Price to Book Value [P/B] P/B 0.85 1.17
Price to Earnings [P/E] P/E 13.15 15.63
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 1.54 271.44
Dividend Payout Ratio % Div Payout % (Qtr) 65.40 35.28
Dividend per Basic Share Div per Share (Qtr) 0.34 0.89
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 90.43 34.52
Interest Coverage Interest Coverage 0.00 -0.05
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 28.19 -73.15
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 16.17 15.78
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 5.32
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 78.97 110.93
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 44.48 38.80
EBIT Growth (1y) % EBIT 1y % (Qtr) 53.45 61.46
EBT Growth (1y) % EBT 1y % (Qtr) 53.45 61.37
EPS Growth (1y) % EPS 1y % (Qtr) 79.31 76.34
FCF Growth (1y) % FCF 1y % (Qtr) 107.84 161.72
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 20.62 14.15
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.02 0.04
Cash Payout Ratio Cash Payout (Qtr) 0.74 0.26
Cash Ratio Cash Ratio 0.00 0.00
Current Ratio Current Ratio 0.00 0.01
Debt to Equity Ratio Debt/Equity (Qtr) 1.92 0.53
Interest Cover Ratio Interest Cover Ratio 0.00 -0.05
Times Interest Earned Times Interest Earned 0.00 -0.05
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 45.30 147.97
EBIT Margin % EBIT Margin % (Qtr) 41.45 155.41
EBT Margin % EBT Margin % (Qtr) 41.45 154.66
Gross Margin % Gross Margin % (Qtr) 100.00 97.82
Net Profit Margin % Net Margin % (Qtr) 34.00 115.63