SR Bancorp, Inc. (NASDAQ: SRBK)

Sector: Financial Services Industry: Banks - Regional CIK: 0001951276
Market Cap 129.73 Mn
P/B 0.68
P/E 29.07
P/S 3.98
ROIC (Qtr) 1.73
Div Yield % 0.96
Rev 1y % (Qtr) -6.55
Total Debt (Qtr) 46.34 Mn
Debt/Equity (Qtr) 0.24

About

SR Bancorp, Inc., also known as Somerset Regal Bank, is a Maryland-chartered company operating in the banking industry, with its stock symbol being SRBK. The company's main business activities are focused on providing a range of financial services, including deposit accounts, loans, and other banking services to individuals and businesses in its market area. SR Bancorp's primary market area includes central New Jersey, with a focus on the counties of Somerset, Hunterdon, Middlesex, Essex, Morris, and Union. SR Bancorp generates revenue primarily...

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Price action

Investment thesis

Bull case

  • Strong tangible asset base of 1.08B provides 23.38x coverage of total debt 46.34M, indicating robust asset backing and low credit risk.
  • Robust free cash flow of 3.67M exceeds capital expenditure of 427000 by 8.60x, indicating strong organic growth funding capability.
  • Retained earnings of 120.80M represent substantial 0.63x of equity 191.93M, indicating strong internal capital generation.
  • Retained earnings of 120.80M provide strong 4.58x coverage of intangibles 26.39M, indicating quality earnings retention.
  • Strong tangible asset base of 1.08B provides 41.06x coverage of intangibles 26.39M, indicating robust asset quality.

Bear case

  • Operating cash flow of 4.10M barely covers its investment activities of (44.30M), with a coverage ratio of -0.09, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 4.10M provides thin coverage of dividend payments of (873000) with a -4.69 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • The company's operating cash flow of 4.10M shows concerning coverage of stock compensation expenses of 1.51M, with a 2.72 ratio indicating potential earnings quality issues.
  • Retained earnings of 120.80M provide limited buffer against comprehensive income items of (713000), which is -169.42x, indicating elevated exposure to market risks.
  • Free cash flow of 3.67M represents just 0.24x of debt issuance 15.45M, 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 0.10 0.14
EV to Cash from Ops. EV/CFO 27.79 7.21
EV to Debt EV to Debt 2.46 5.20
EV to EBIT EV/EBIT 21.52 14.98
EV to EBITDA EV/EBITDA 18.60 8.92
EV to Free Cash Flow [EV/FCF] EV/FCF 31.03 8.87
EV to Market Cap EV to Market Cap 0.88 1.04
EV to Revenue EV/Rev 3.49 -3.76
Price to Book Value [P/B] P/B 0.68 1.17
Price to Earnings [P/E] P/E 29.07 15.63
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 5.11 271.44
Dividend Payout Ratio % Div Payout % (Qtr) 27.80 35.28
Dividend per Basic Share Div per Share (Qtr) 0.15 0.89
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 32.05 34.52
Interest Coverage Interest Coverage 0.00 -0.05
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 52.45 -73.15
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 23.27 15.78
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 5.32
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 343.98 110.93
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 78.46 38.80
EBIT Growth (1y) % EBIT 1y % (Qtr) 120.32 61.46
EBT Growth (1y) % EBT 1y % (Qtr) 120.32 61.37
EPS Growth (1y) % EPS 1y % (Qtr) 285.71 76.34
FCF Growth (1y) % FCF 1y % (Qtr) 421.45 161.72
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 5.70 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) 0.19 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) 18.80 147.97
EBIT Margin % EBIT Margin % (Qtr) 16.22 155.41
EBT Margin % EBT Margin % (Qtr) 16.22 154.66
Gross Margin % Gross Margin % (Qtr) 100.00 97.82
Net Profit Margin % Net Margin % (Qtr) 13.70 115.63