NewtekOne, Inc. (NASDAQ: NEWT)

Sector: Financial Services Industry: Banks - Regional CIK: 0001587987
Market Cap 329.38 Mn
P/B 1.32
P/E 7.18
P/S 1.72
ROIC (Qtr) 5.38
Div Yield % 8.11
Rev 1y % (Qtr) 20.25
Total Debt (Qtr) 750.87 Mn
Debt/Equity (Qtr) 1.94

About

NewtekOne, Inc. (NEWT) is a financial holding company that operates as a leading business and financial solutions provider to independent business owners and small to medium-sized businesses (SMBs) in the United States. Previously a non-diversified closed-end management investment company, NewtekOne has evolved into a financial holding company, following its acquisition of NBNYC, a national bank regulated by the Office of the Comptroller of the Currency (OCC). The company is now subject to the regulation and supervision of the Federal Reserve and...

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Price action

Investment thesis

Bull case

  • Strong tangible asset base of 2.37B provides 3.15x coverage of total debt 750.87M, indicating robust asset backing and low credit risk.
  • Free cash flow of (519.59M) provides excellent 24.27x coverage of dividends (21.41M), indicating sustainable shareholder returns.
  • Strong free cash flow of (519.59M) provides 85x coverage of acquisition spending (6.11M), indicating disciplined M&A strategy.
  • Cash reserves of 216.93M provide comfortable 40.60x coverage of tax obligations 5.34M, showing strong fiscal management.
  • Retained earnings of 81.98M provide strong 2.59x coverage of intangibles 31.66M, indicating quality earnings retention.

Bear case

  • Cash reserves of 216.93M provide limited coverage of acquisition spending of (6.11M), which is -35.49x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • The company's operating cash flow of (519.43M) shows concerning coverage of stock compensation expenses of 5.81M, with a -89.42 ratio indicating potential earnings quality issues.
  • Free cash flow of (519.59M) provides weak coverage of capital expenditures of 160000, with a -3247.44 ratio suggesting additional external financing needs for growth initiatives.
  • Operating cash flow of (519.43M) provides minimal -26.04x coverage of tax expenses of 19.95M, suggesting potential tax planning inefficiencies or unsustainable tax positions.
  • Free cash flow of (519.59M) represents just -1.94x of debt issuance 267.65M, suggesting concerning reliance on leverage rather than internal cash generation for growth.

Peer comparison

Companies in the Banks - Regional
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 PNC Pnc Financial Services Group, Inc. 126.73 Bn 42.27 8.85 62.34 Bn
2 USB Us Bancorp De 92.56 Bn 18.01 3.75 77.98 Bn
3 NU Nu Holdings Ltd. 84.71 Bn 33.49 6.02 4.49 Bn
4 NWG NatWest Group plc 64.34 Bn 9.55 2.95 169.04 Bn
5 MTB M&T Bank Corp 39.39 Bn 13.49 4.22 14.99 Bn
6 FITB Fifth Third Bancorp 38.93 Bn 15.70 4.83 18.94 Bn
7 TFC Truist Financial Corp 38.35 Bn 34.67 5.49 71.11 Bn
8 CFG Citizens Financial Group Inc/Ri 35.99 Bn 40.30 7.81 10.66 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.32 0.13
EV to Cash from Ops. EV/CFO -4.50 14.51
EV to Debt EV to Debt 1.01 6.80
EV to EBIT EV/EBIT 16.79 15.32
EV to EBITDA EV/EBITDA 15.70 15.64
EV to Free Cash Flow [EV/FCF] EV/FCF -4.49 28.62
EV to Market Cap EV to Market Cap 2.31 1.05
EV to Revenue EV/Rev 3.97 5.87
Price to Book Value [P/B] P/B 1.32 1.92
Price to Earnings [P/E] P/E 7.18 33.31
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 2.50 275.92
Dividend Payout Ratio % Div Payout % (Qtr) 33.30 34.59
Dividend per Basic Share Div per Share (Qtr) 0.76 0.89
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) -3.85 23.88
Interest Coverage Int. cover (Qtr) 0.00 -0.06
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 70.37 -76.09
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 13.92 16.48
Dividend Growth (1y) % Div 1y % (Qtr) 1.33 5.36
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 36.69 112.22
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 28.85 39.25
EBIT Growth (1y) % EBIT 1y % (Qtr) 32.57 61.93
EBT Growth (1y) % EBT 1y % (Qtr) 32.57 61.84
EPS Growth (1y) % EPS 1y % (Qtr) 34.91 76.92
FCF Growth (1y) % FCF 1y % (Qtr) -300.60 164.96
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 13.03 14.29
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.10 0.04
Cash Payout Ratio Cash Payout (Qtr) -0.04 0.25
Cash Ratio Cash Ratio 0.00 0.00
Current Ratio Current Ratio 0.00 0.01
Debt to Equity Ratio Debt/Equity (Qtr) 1.94 0.52
Interest Cover Ratio Int Coverage (Qtr) 0.00 -0.06
Times Interest Earned Times Interest Earned (Qtr) 0.00 -0.06
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 32.40 150.08
EBIT Margin % EBIT Margin % (Qtr) 32.08 157.64
EBT Margin % EBT Margin % (Qtr) 32.08 156.88
Gross Margin % Gross Margin % (Qtr) 100.00 97.78
Net Profit Margin % Net Margin % (Qtr) 23.30 117.29