Live Oak Bancshares, Inc. (NYSE: LOB)

Sector: Financial Services Industry: Banks - Regional CIK: 0001462120
Market Cap 1.57 Bn
P/B 1.31
P/E 22.95
P/S 3.61
ROIC (Qtr) 5.54
Div Yield % 0.44
Rev 1y % (Qtr) 29.79
Total Debt (Qtr) 105.05 Mn
Debt/Equity (Qtr) 0.09

About

Live Oak Bancshares, Inc. (LOB), commonly known as Live Oak Bank, is a bank holding company that operates in the commercial banking industry. Its subsidiary, Live Oak Banking Company, is a North Carolina-chartered commercial bank that offers financial services to small businesses across the country. The company's stock is publicly traded on the New York Stock Exchange under the ticker symbol LOB. Live Oak Bank specializes in originating loans partially guaranteed by the U.S. Small Business Administration (SBA) and to a lesser extent by the United...

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Price action

Investment thesis

Bull case

  • Strong operating cash flow of 117.10M provides robust 1.11x coverage of total debt 105.05M, indicating excellent debt servicing capability and financial flexibility.
  • Strong tangible asset base of 14.60B provides 139.02x coverage of total debt 105.05M, indicating robust asset backing and low credit risk.
  • Robust free cash flow of 112.05M exceeds capital expenditure of 5.05M by 22.21x, indicating strong organic growth funding capability.
  • Operating cash flow of 117.10M provides strong 2.36x coverage of operating expenses 49.59M, showing operational efficiency.
  • Retained earnings of 770.82M provide strong 12.33x coverage of intangibles 62.49M, indicating quality earnings retention.

Bear case

  • Operating cash flow of 117.10M barely covers its investment activities of (1.86B), with a coverage ratio of -0.06, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 117.10M provides thin coverage of dividend payments of (5.47M) with a -21.42 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • The company's operating cash flow of 117.10M shows concerning coverage of stock compensation expenses of 25.69M, with a 4.56 ratio indicating potential earnings quality issues.
  • Free cash flow of 112.05M represents just -10.85x of debt issuance (10.33M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Operating cash flow of 117.10M shows concerning coverage of minority interest expenses of (197000), which is -594.40x, suggesting complex corporate structure risks.

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 0.07 0.14
EV to Cash from Ops. EV/CFO 8.71 7.21
EV to Debt EV to Debt 9.70 5.20
EV to EBIT EV/EBIT 10.81 14.98
EV to EBITDA EV/EBITDA 8.37 8.92
EV to Free Cash Flow [EV/FCF] EV/FCF 9.10 8.87
EV to Market Cap EV to Market Cap 0.65 1.04
EV to Revenue EV/Rev 2.34 -3.76
Price to Book Value [P/B] P/B 1.31 1.17
Price to Earnings [P/E] P/E 22.95 15.63
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 10.68 271.44
Dividend Payout Ratio % Div Payout % (Qtr) 8.00 35.28
Dividend per Basic Share Div per Share (Qtr) 0.12 0.89
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 4.90 34.52
Interest Coverage Interest Coverage 0.00 -0.05
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -35.17 -73.15
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 33.87 15.78
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 5.32
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -16.93 110.93
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -6.42 38.80
EBIT Growth (1y) % EBIT 1y % (Qtr) 0.90 61.46
EBT Growth (1y) % EBT 1y % (Qtr) 0.90 61.37
EPS Growth (1y) % EPS 1y % (Qtr) -19.79 76.34
FCF Growth (1y) % FCF 1y % (Qtr) 166.19 161.72
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 3.89 14.15
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.03 0.04
Cash Payout Ratio Cash Payout (Qtr) 0.05 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) 0.09 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) 27.80 147.97
EBIT Margin % EBIT Margin % (Qtr) 21.64 155.41
EBT Margin % EBT Margin % (Qtr) 21.64 154.66
Gross Margin % Gross Margin % (Qtr) 100.00 97.82
Net Profit Margin % Net Margin % (Qtr) 15.70 115.63