Norwood Financial Corp (NASDAQ: NWFL)

Sector: Financial Services Industry: Banks - Regional CIK: 0001013272
Market Cap 349.69 Mn
P/B 1.49
P/E 45.65
P/S 5.78
ROIC (Qtr) 2.36
Div Yield % 5.48
Rev 1y % (Qtr) 39.00
Total Debt (Qtr) 72.07 Mn
Debt/Equity (Qtr) 0.31

About

Norwood Financial Corp, also known as NWFL, operates in the banking industry and is the parent company of Wayne Bank. Incorporated in 1995, Norwood Financial Corp is subject to regulation by the Federal Reserve System and the Pennsylvania Department of Banking and Securities. Wayne Bank, as a community bank, offers a wide range of financial services to individuals, businesses, and municipalities in northeastern Pennsylvania and upstate New York, through its 15 offices in Pennsylvania and 14 offices in New York. Wayne Bank's main business activities...

Read more

Price action

Investment thesis

Bull case

  • Strong operating cash flow of 30M provides robust 0.42x coverage of total debt 72.07M, indicating excellent debt servicing capability and financial flexibility.
  • Strong tangible asset base of 2.38B provides 33.06x coverage of total debt 72.07M, indicating robust asset backing and low credit risk.
  • Operating cash flow of 30M provides strong 41.90x coverage of stock compensation 716000, indicating sustainable incentive practices.
  • Robust free cash flow of 24.89M exceeds capital expenditure of 5.11M by 4.87x, indicating strong organic growth funding capability.
  • Retained earnings of 136.66M represent substantial 0.58x of equity 234.91M, indicating strong internal capital generation.

Bear case

  • Operating cash flow of 30M barely covers its investment activities of (148.41M), with a coverage ratio of -0.20, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 30M provides thin coverage of dividend payments of (11.04M) with a -2.72 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Free cash flow of 24.89M represents just -0.20x of debt issuance (125.34M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Retained earnings of 136.66M provide limited buffer against comprehensive income items of (23.71M), which is -5.76x, indicating elevated exposure to market risks.
  • R&D investment of 0 represents just 0x of SG&A expenses of 42.03M, 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 0.17 0.14
EV to Cash from Ops. EV/CFO 13.62 7.21
EV to Debt EV to Debt 5.67 5.20
EV to EBIT EV/EBIT 42.58 14.98
EV to EBITDA EV/EBITDA 37.19 8.92
EV to Free Cash Flow [EV/FCF] EV/FCF 16.42 8.87
EV to Market Cap EV to Market Cap 1.17 1.04
EV to Revenue EV/Rev 6.75 -3.76
Price to Book Value [P/B] P/B 1.49 1.17
Price to Earnings [P/E] P/E 45.65 15.63
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.69 271.44
Dividend Payout Ratio % Div Payout % (Qtr) 198.40 35.28
Dividend per Basic Share Div per Share (Qtr) 1.24 0.89
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 46.15 34.52
Interest Coverage Interest Coverage 0.00 -0.05
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -98.49 -73.15
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -9.83 15.78
Dividend Growth (1y) % Div 1y % (Qtr) 3.33 5.32
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -40.35 110.93
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -37.78 38.80
EBIT Growth (1y) % EBIT 1y % (Qtr) -40.97 61.46
EBT Growth (1y) % EBT 1y % (Qtr) -40.97 61.37
EPS Growth (1y) % EPS 1y % (Qtr) -61.25 76.34
FCF Growth (1y) % FCF 1y % (Qtr) 12.40 161.72
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -2.83 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) 0.31 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) 0.31 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) 18.10 147.97
EBIT Margin % EBIT Margin % (Qtr) 15.85 155.41
EBT Margin % EBT Margin % (Qtr) 15.85 154.66
Gross Margin % Gross Margin % (Qtr) 100.00 97.82
Net Profit Margin % Net Margin % (Qtr) 12.70 115.63