NewtekOne, Inc. (NASDAQ: NEWT)

Sector: Financial Services Industry: Banks - Regional CIK: 0001587987
Market Cap 286.85 Mn
P/B 0.74
P/E 4.98
P/S 1.16
ROIC (Qtr) 5.38
Div Yield % 8.37
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 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 0.31 0.14
EV to Cash from Ops. EV/CFO -1.41 7.21
EV to Debt EV to Debt 0.98 5.20
EV to EBIT EV/EBIT 9.25 14.98
EV to EBITDA EV/EBITDA 9.15 8.92
EV to Free Cash Flow [EV/FCF] EV/FCF -1.41 8.87
EV to Market Cap EV to Market Cap 2.56 1.04
EV to Revenue EV/Rev 2.97 -3.76
Price to Book Value [P/B] P/B 0.74 1.17
Price to Earnings [P/E] P/E 4.98 15.63
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 2.50 271.44
Dividend Payout Ratio % Div Payout % (Qtr) 33.30 35.28
Dividend per Basic Share Div per Share (Qtr) 0.76 0.89
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) -3.85 34.52
Interest Coverage Int. cover (Qtr) 0.00 -0.05
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 70.37 -73.15
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 13.92 15.78
Dividend Growth (1y) % Div 1y % (Qtr) 1.33 5.32
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 36.69 110.93
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 28.85 38.80
EBIT Growth (1y) % EBIT 1y % (Qtr) 32.57 61.46
EBT Growth (1y) % EBT 1y % (Qtr) 32.57 61.37
EPS Growth (1y) % EPS 1y % (Qtr) 34.91 76.34
FCF Growth (1y) % FCF 1y % (Qtr) -300.60 161.72
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 13.03 14.15
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 0.26
Cash Ratio Cash Ratio 0.00 0.00
Current Ratio Current Ratio 0.00 0.01
Debt to Equity Ratio Debt/Equity (Qtr) 1.94 0.53
Interest Cover Ratio Int Coverage (Qtr) 0.00 -0.05
Times Interest Earned Times Interest Earned (Qtr) 0.00 -0.05
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 32.40 147.97
EBIT Margin % EBIT Margin % (Qtr) 32.08 155.41
EBT Margin % EBT Margin % (Qtr) 32.08 154.66
Gross Margin % Gross Margin % (Qtr) 100.00 97.82
Net Profit Margin % Net Margin % (Qtr) 23.30 115.63