TFS Financial CORP (NASDAQ: TFSL)

Sector: Financial Services Industry: Banks - Regional CIK: 0001381668
Market Cap 3.81 Bn
P/B 2.01
P/E 41.84
P/S 11.93
ROIC (Qtr) 1.33
Div Yield % 10.55
Rev 1y % (Qtr) 13.96
Total Debt (Qtr) 5.01 Bn
Debt/Equity (Qtr) 2.65

About

TFS Financial Corporation, known by its ticker symbol TFSL, is a mid-tier stock holding company that operates within the banking industry, with its main office in Cleveland, Ohio. The company's primary business activities include originating and servicing residential real estate mortgage loans, as well as attracting retail savings deposits. TFS Financial's operations span across 37 additional full-service branches and four loan production offices located throughout the states of Ohio and Florida. In the residential real estate market, TFS Financial...

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Price action

Investment thesis

Bull case

  • Strong tangible asset base of 17.46B provides 3.48x coverage of total debt 5.01B, indicating robust asset backing and low credit risk.
  • Robust free cash flow of 70.97M exceeds capital expenditure of 11.45M by 6.20x, indicating strong organic growth funding capability.
  • Free cash flow of 70.97M provides solid 1.52x coverage of operating expenses 46.77M, showing operational efficiency.
  • Operating cash flow of 82.42M provides strong 7.20x coverage of capital expenditure 11.45M, enabling organic growth.

Bear case

  • Operating cash flow of 82.42M barely covers its investment activities of (383.98M), with a coverage ratio of -0.21, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 82.42M provides thin coverage of dividend payments of (59.53M) with a -1.38 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Free cash flow of 70.97M represents just 0.14x of debt issuance 507.53M, suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Retained earnings of 946.78M provide limited buffer against comprehensive income items of (21.23M), which is -44.59x, indicating elevated exposure to market risks.
  • Operating cash flow of 82.42M is outpaced by equity issuance of (3.98M) (-20.72 ratio), indicating concerning reliance on equity markets for funding operations.

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 0.48 0.14
EV to Cash from Ops. EV/CFO 101.73 7.21
EV to Debt EV to Debt 1.67 5.20
EV to EBIT EV/EBIT 73.09 14.98
EV to EBITDA EV/EBITDA 60.86 8.92
EV to Free Cash Flow [EV/FCF] EV/FCF 118.15 8.87
EV to Market Cap EV to Market Cap 2.20 1.04
EV to Revenue EV/Rev 26.29 -3.76
Price to Book Value [P/B] P/B 2.01 1.17
Price to Earnings [P/E] P/E 41.84 15.63
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 1.53 271.44
Dividend Payout Ratio % Div Payout % (Qtr) 353.10 35.28
Dividend per Basic Share Div per Share (Qtr) 1.13 0.89
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 443.14 34.52
Interest Coverage Interest Coverage 0.00 -0.05
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -273.79 -73.15
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -7.39 15.78
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 5.32
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 14.29 110.93
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 15.43 38.80
EBIT Growth (1y) % EBIT 1y % (Qtr) 14.36 61.46
EBT Growth (1y) % EBT 1y % (Qtr) 14.36 61.37
EPS Growth (1y) % EPS 1y % (Qtr) 14.29 76.34
FCF Growth (1y) % FCF 1y % (Qtr) -17.03 161.72
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 4.70 14.15
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.02 0.04
Cash Payout Ratio Cash Payout (Qtr) 0.63 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) 2.65 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) 35.96 155.41
EBT Margin % EBT Margin % (Qtr) 35.96 154.66
Gross Margin % Gross Margin % (Qtr) 100.00 97.82
Net Profit Margin % Net Margin % (Qtr) 28.50 115.63