Shore Bancshares Inc (NASDAQ: SHBI)

Sector: Financial Services Industry: Banks - Regional CIK: 0001035092
Market Cap 591.44 Mn
P/B 1.02
P/E 10.39
P/S 2.78
ROIC (Qtr) 8.13
Div Yield % 3.40
Rev 1y % (Qtr) 8.73
Total Debt (Qtr) 135.89 Mn
Debt/Equity (Qtr) 0.24

About

Shore Bancshares, Inc., a financial holding company operating under the Bank Holding Company Act of 1956, is a prominent player in the banking industry. Its primary subsidiary, Shore United Bank, offers a variety of financial services to clients in Maryland, Delaware, and Virginia. The company's operations span across several segments, including commercial and residential lending, consumer lending, trust services, and investment services. In the commercial lending segment, Shore Bancshares provides loans to businesses, tailoring solutions to meet...

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Price action

Investment thesis

Bull case

  • Strong operating cash flow of 86.33M provides robust 0.64x coverage of total debt 135.89M, indicating excellent debt servicing capability and financial flexibility.
  • Strong tangible asset base of 6.18B provides 45.50x coverage of total debt 135.89M, indicating robust asset backing and low credit risk.
  • Operating cash flow of 86.33M provides strong 47.05x coverage of stock compensation 1.83M, indicating sustainable incentive practices.
  • Robust free cash flow of 84.38M exceeds capital expenditure of 1.96M by 43.11x, indicating strong organic growth funding capability.
  • Operating cash flow of 86.33M provides strong 3.67x coverage of operating expenses 23.55M, showing operational efficiency.

Bear case

  • Operating cash flow of 86.33M barely covers its investment activities of (138.38M), with a coverage ratio of -0.62, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 86.33M provides thin coverage of dividend payments of (16.09M) with a -5.36 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Retained earnings of 221.69M provide limited buffer against comprehensive income items of (4.76M), which is -46.58x, indicating elevated exposure to market risks.
  • R&D investment of 0 represents just 0x of SG&A expenses of 112.93M, indicating potential underinvestment in innovation relative to administrative overhead.
  • Fixed assets of 91.71M showing 5.83x ratio to depreciation of 15.74M indicates aging infrastructure requiring significant near-term capital investment.

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 0.09 0.14
EV to Cash from Ops. EV/CFO 6.28 7.21
EV to Debt EV to Debt 3.99 5.20
EV to EBIT EV/EBIT 7.13 14.98
EV to EBITDA EV/EBITDA 5.91 8.92
EV to Free Cash Flow [EV/FCF] EV/FCF 6.43 8.87
EV to Market Cap EV to Market Cap 0.92 1.04
EV to Revenue EV/Rev 2.55 -3.76
Price to Book Value [P/B] P/B 1.02 1.17
Price to Earnings [P/E] P/E 10.39 15.63
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 3.54 271.44
Dividend Payout Ratio % Div Payout % (Qtr) 28.20 35.28
Dividend per Basic Share Div per Share (Qtr) 0.48 0.89
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 19.01 34.52
Interest Coverage Interest Coverage 0.00 -0.05
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 68.78 -73.15
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 126.83 15.78
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 5.32
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 38.46 110.93
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 28.87 38.80
EBIT Growth (1y) % EBIT 1y % (Qtr) 38.04 61.46
EBT Growth (1y) % EBT 1y % (Qtr) 38.04 61.37
EPS Growth (1y) % EPS 1y % (Qtr) 28.79 76.34
FCF Growth (1y) % FCF 1y % (Qtr) 90.60 161.72
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 10.07 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) 0.18 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) 0.24 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) 43.20 147.97
EBIT Margin % EBIT Margin % (Qtr) 35.77 155.41
EBT Margin % EBT Margin % (Qtr) 35.77 154.66
Gross Margin % Gross Margin % (Qtr) 100.00 97.82
Net Profit Margin % Net Margin % (Qtr) 26.80 115.63