National Bankshares Inc (NASDAQ: NKSH)

Sector: Financial Services Industry: Banks - Regional CIK: 0000796534
Market Cap 213.53 Mn
P/B 1.19
P/E 16.40
P/S 4.11
ROIC (Qtr) 6.45
Div Yield % 6.81
Rev 1y % (Qtr) 18.56
Total Debt (Qtr) 50.00 Mn
Debt/Equity (Qtr) 0.28

About

National Bankshares, Inc. (NKSH) is a financial holding company that operates in the banking industry, with its wholly-owned community bank subsidiary, National Bank of Blacksburg (NBB), being a national banking association. Based in southwest Virginia, NBB offers a variety of retail and commercial banking services to individuals, businesses, non-profits, and local governments in the region. NBB's main business activities include lending and deposit-taking. The bank's lending activities are primarily focused on small and mid-sized businesses and...

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Price action

Investment thesis

Bull case

  • Operating cash flow of 16.17M provides strong 90.82x coverage of stock compensation 178000, indicating sustainable incentive practices.
  • Strong tangible asset base of 1.79B provides 35.80x coverage of total debt 50M, indicating robust asset backing and low credit risk.
  • Robust free cash flow of 12.91M exceeds capital expenditure of 3.26M by 3.96x, indicating strong organic growth funding capability.
  • Cash reserves of 42.30M provide ample 3254.23x coverage of acquisition spending 13000, enabling strategic growth opportunities.
  • Strong free cash flow of 12.91M provides 992.92x coverage of acquisition spending 13000, indicating disciplined M&A strategy.

Bear case

  • Operating cash flow of 16.17M barely covers its investment activities of (22.76M), with a coverage ratio of -0.71, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 16.17M provides thin coverage of dividend payments of (9.61M) with a -1.68 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Retained earnings of 201.64M provide limited buffer against comprehensive income items of (44.40M), which is -4.54x, indicating elevated exposure to market risks.
  • Free cash flow of 12.91M represents just 0.26x of debt issuance 50M, suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • R&D investment of 0 represents just 0x of SG&A expenses of 25.98M, indicating potential underinvestment in innovation relative to administrative overhead.

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 7.47 7.21
EV to Debt EV to Debt 2.41 5.20
EV to EBIT EV/EBIT 7.73 14.98
EV to EBITDA EV/EBITDA 7.08 8.92
EV to Free Cash Flow [EV/FCF] EV/FCF 9.35 8.87
EV to Market Cap EV to Market Cap 0.57 1.04
EV to Revenue EV/Rev 2.32 -3.76
Price to Book Value [P/B] P/B 1.19 1.17
Price to Earnings [P/E] P/E 16.40 15.63
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 1.36 271.44
Dividend Payout Ratio % Div Payout % (Qtr) 73.70 35.28
Dividend per Basic Share Div per Share (Qtr) 1.51 0.89
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 74.38 34.52
Interest Coverage Interest Coverage 0.00 -0.05
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -78.91 -73.15
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -15.00 15.78
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 5.32
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 49.20 110.93
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 48.04 38.80
EBIT Growth (1y) % EBIT 1y % (Qtr) 48.79 61.46
EBT Growth (1y) % EBT 1y % (Qtr) 48.79 61.37
EPS Growth (1y) % EPS 1y % (Qtr) 40.41 76.34
FCF Growth (1y) % FCF 1y % (Qtr) 194.03 161.72
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 19.63 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) 0.49 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) 0.28 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) 32.80 147.97
EBIT Margin % EBIT Margin % (Qtr) 30.05 155.41
EBT Margin % EBT Margin % (Qtr) 30.05 154.66
Gross Margin % Gross Margin % (Qtr) 100.00 97.82
Net Profit Margin % Net Margin % (Qtr) 25.10 115.63