Newtek Business (NEWT) AI Stock Analysis

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Newtek Business

(NASDAQ:NEWT)

56Neutral

Newtek Business faces mixed financial indicators with zero revenue in 2024 and cash flow challenges, but strong EPS growth and favorable earnings guidance. Technical analysis suggests caution, while valuation metrics indicate possible undervaluation. The earnings call highlights robust financial performance but also warns of credit risks and macroeconomic challenges.

Newtek Business (NEWT) vs. S&P 500 (SPY)

Market Cap

$265.27M

Dividend Yield7.53%

Average Volume (3M)245.21K

Price to Earnings (P/E)5.2

Beta (1Y)1.19

Revenue Growth33.15%

EPS Growth18.48%

CountryUS

Employees591

SectorFinancial

Sector Strength81

IndustryAsset Management

Share Statistics

EPS (TTM)1.94

Shares Outstanding26,290,668

10 Day Avg. Volume289,177

30 Day Avg. Volume245,205

Financial Highlights & Ratios

PEG Ratio0.28

Price to Book (P/B)N/A

Price to Sales (P/S)1.26

Price to Cash Flow (P/CF)-0.90

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$14.67

Price Target Upside48.63% Upside

Rating ConsensusHold

Number of Analyst Covering3

Newtek Business Business Overview & Revenue Model

Company DescriptionNewtek Business Services Corp. (NEWT) is a business development company that provides a wide range of financial and business services to small and medium-sized businesses. Operating primarily in the United States, Newtek offers services including lending solutions, electronic payment processing, managed technology solutions, and payroll and benefits processing. The company aims to support the growth and operational efficiency of its clients through its diverse suite of products and services.

How the Company Makes MoneyNewtek Business Services Corp. generates revenue through several key streams. Primarily, it earns income from interest and fees on its small business loans, including SBA 7(a) loans and other financing products. Additionally, the company makes money through fees from its electronic payment processing services, where it facilitates transactions for its clients. Newtek also earns revenue from its managed technology solutions, which include IT services and cloud computing, as well as from payroll and benefits processing services. These diversified revenue streams are supported by strategic partnerships with financial institutions and technology providers, enhancing Newtek's ability to deliver comprehensive solutions to its business clients.

Newtek Business Financial Statement Overview

Summary

Newtek Business faces significant financial challenges with zero revenue reported in 2024, despite previous growth. Debt reduction is positive, but profitability and cash flow sustainability remain concerns, especially with negative free cash flow.

Income Statement

Neutral

Newtek Business has experienced inconsistent revenue growth, with a significant drop in revenue to zero in 2024 from $253 million in 2023. Historical data shows fluctuating profit margins, with a net profit margin of 18.7% in 2023. The company has struggled to maintain EBIT and EBITDA margins due to operational challenges.

Balance Sheet

Neutral

The company has improved its debt position, with total debt dropping to zero in 2024, indicating strong debt management. However, the equity ratio decreased from 25.6% in 2023 to 14.4% in 2024, which may pose risks if asset growth does not translate into profitability.

Cash Flow

Negative

Newtek Business has faced significant cash flow challenges, as indicated by negative free cash flow in recent years. The operating cash flow to net income ratio was negative in 2023, showing inefficiencies in converting income to cash. The lack of free cash flow in 2024 raises concerns about liquidity and operational funding.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
237.74M	253.14M	105.17M	147.76M	74.96M
	Gross Profit
237.74M	208.83M	84.98M	117.95M	56.27M
	EBIT
-151.59M	97.53M	65.10M	85.47M	32.62M
	EBITDA
0.00	125.70M	23.24M	106.51M	51.95M
	Net Income Common Stockholders
50.85M	47.33M	32.31M	84.14M	33.62M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
30.86M	153.09M	72.86M	2.40M	2.07M
	Total Assets
2.06B	1.44B	998.90M	1.06B	840.98M
	Total Debt
714.54M	644.12M	547.30M	481.11M	460.48M
	Net Debt
-6.94M	644.12M	493.61M	478.71M	458.41M
	Total Liabilities
1.76B	1.18B	623.54M	652.67M	501.63M
	Stockholders Equity
296.28M	249.05M	375.36M	403.89M	339.35M
Cash Flow		Free Cash Flow
-153.45M	-89.06M	-62.43M	140.92M	17.75M
	Operating Cash Flow
-153.01M	-88.60M	-62.42M	140.92M	17.76M
	Investing Cash Flow
-209.05M	-172.24M	-11.00K	-32.34M	-10.00K
	Financing Cash Flow
560.90M	344.97M	1.18M	-5.49M	465.00K

Newtek Business Technical Analysis

Technical Analysis Sentiment

Negative

Last Price9.87

Price Trends

50DMA

12.45

Negative

100DMA

12.92

Negative

200DMA

12.69

Negative

Market Momentum

MACD

-0.14

Positive

RSI

43.49

Neutral

STOCH

30.31

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NEWT, the sentiment is Negative. The current price of 9.87 is below the 20-day moving average (MA) of 11.95, below the 50-day MA of 12.45, and below the 200-day MA of 12.69, indicating a bearish trend. The MACD of -0.14 indicates Positive momentum. The RSI at 43.49 is Neutral, neither overbought nor oversold. The STOCH value of 30.31 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for NEWT.

Newtek Business Risk Analysis

Newtek Business disclosed 68 risk factors in its most recent earnings report. Newtek Business reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Newtek Business Peers Comparison

Overall Rating

UnderperformOutperform

Sector (63)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ARCC	76 Outperform	$13.67B	8.19	12.40%	9.61%	19.95%	-10.57%
MAIN	74 Outperform	$4.56B	8.80	19.26%	5.83%	51.80%	12.05%
GSBD	72 Outperform	$1.24B	19.32	3.96%	15.77%	-28.04%	-69.52%
HTGC	67 Neutral	$2.98B	10.68	13.71%	9.31%	-1.49%	-29.48%
Sector *	63 Neutral	$12.88B	9.21	9.18%	4.78%	16.30%	-8.66%
TCPC	58 Neutral	$602.35M	―	-8.57%	17.94%	8.24%	-207.60%
NEWT	56 Neutral	$265.27M	5.16	18.65%	7.53%	33.15%	18.48%

* Financial Sector Average

Performance Comparison

NEWT

Newtek Business

9.87

-1.86

-15.86%

HTGC

Hercules Capital

16.60

-0.09

-0.54%

MAIN

Main Street Capital

50.30

6.08

13.75%

ARCC

Ares Capital

19.31

0.54

2.88%

TCPC

BlackRock TCP Capital

6.58

-2.09

-24.11%

GSBD

Goldman Sachs BDC

10.05

-2.95

-22.69%

Newtek Business Earnings Call Summary

Earnings Call Date: Feb 26, 2025 | % Change Since: -19.30% | Next Earnings Date: May 6, 2025

Earnings Call Sentiment Positive

NewtekOne's earnings call highlighted strong financial performance with significant improvements in profitability and growth in loans and deposits. However, concerns over potential credit risks and macroeconomic challenges were noted. Despite these challenges, the company's positive earnings forecast suggests confidence in continued growth.

Highlights

Strong Financial Performance

NewtekOne reported $0.70 per basic share and $0.69 per diluted share, marking a 43% improvement over the previous year and quarter. Net interest income increased by 36% over the same period a year earlier.

Growth in Loan and Deposit Accounts

The company showed strong loan and deposit growth with $269 million in loans for the year and core business deposits growing to $216 million, an increase of approximately $106 million from the previous year.

High ROAA and ROTCE

Newtek Bank reported a Return on Average Assets (ROAA) of 6.3% and a Return on Tangible Common Equity (ROTCE) of 48%, with an efficiency ratio of 42%, which are exceptionally strong metrics in the banking industry.

Positive Earnings Forecast

The company raised its earnings per share forecast for 2025 to a range of $2.10 to $2.50, up from a previous forecast of $2.00.

Lowlights

Credit Concerns

There is an expectation of higher charge-off rates in the bank portfolio, with an anticipated increase from 1.5% to 2% in 2025, indicating potential credit risk challenges.

Unfavorable Macroeconomic Conditions

The company highlighted challenging macroeconomic conditions, including higher interest rates and inflation, which could negatively impact their client base.

NSBF Portfolio Drag

The NSBF portfolio, in runoff mode, is a drag on the company's financial performance due to higher financing costs and non-cash write-offs.

Company Guidance

In the NewtekOne, Inc. Fourth Quarter 2024 Earnings Conference Call, the company provided robust guidance and highlighted several key metrics. Barry Sloane, President, Founder, and CEO, reported a 43% year-over-year increase in earnings per share, with earnings per share reaching $0.70 per basic and $0.69 per diluted share. Net interest income saw a 36% increase compared to the same period last year. Shareholders' equity grew by 19% to $296 million, while the company maintained a strong return on average assets (ROAA) of 6.3% and return on tangible common equity (ROTCE) of 48%. NewtekOne also reported a favorable efficiency ratio of 42%, contributing to its solid financial performance. The company anticipates 2025 earnings per share to be in the range of $2.10 to $2.50, projecting further growth driven by $1 billion in SBA 7(a) loan originations, with $750 million in guaranteed bonds expected for sale and $250 million to remain on the balance sheet.

Newtek Business Corporate Events

Executive/Board Changes

Newtek Business Board Restructures After Director Retirement

Neutral

Apr 1, 2025

On April 1, 2025, Salvatore Mulia retired from the NewtekOne, Inc. Board of Directors, where he had served since 2004. Following his retirement, the Board reduced its size from eight to seven members, and Fernando Perez-Hickman was appointed to the Audit Committee, potentially impacting the company’s governance dynamics.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.