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Newtek Business Services (NEWT)
:NEWT
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Newtek Business
(NASDAQ:NEWT)
Rating:61Neutral
Price Target:
$11.50
▲( 7.28% Upside)
Newtek Business (NEWT) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$282.39M
Dividend Yield7.05%
Average Volume (3M)304.41K
Price to Earnings (P/E)5.6
Beta (1Y)1.08
Revenue Growth21.99%
EPS Growth23.40%
CountryUS
Employees591
SectorFinancial
Sector Strength81
IndustryAsset Management
Share Statistics
EPS (TTM)0.35
Shares Outstanding26,342,028
10 Day Avg. Volume276,404
30 Day Avg. Volume304,409
Financial Highlights & Ratios
PEG Ratio-5.74
Price to Book (P/B)0.97
Price to Sales (P/S)0.00
P/FCF Ratio-1.44
Enterprise Value/Market Cap1.01
Enterprise Value/Revenue0.27
Enterprise Value/Gross Profit1.75
Enterprise Value/Ebitda0.65
Forecast
1Y Price Target
$13.50Price Target Upside25.93% 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 in 2024 and negative free cash flow, despite previous growth. Debt reduction is positive, but profitability and cash flow sustainability are major concerns.Income Statement
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.45
Neutral
Balance Sheet
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.60
Neutral
Cash Flow
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.40
Negative
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 241.85M | 237.74M | 253.14M | 105.17M | 147.76M | 74.96M | Gross Profit |
| 162.38M | 237.74M | 208.83M | 84.98M | 117.95M | 56.27M | EBIT |
| 88.68M | 68.69M | 97.53M | 65.10M | 85.47M | 32.62M | EBITDA |
| 111.77M | 70.48M | 125.70M | 23.24M | 106.51M | 51.95M | Net Income Common Stockholders |
| 50.57M | 50.85M | 47.33M | 32.31M | 84.14M | 33.62M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 24.33M | 353.15M | 153.09M | 72.86M | 2.40M | 2.07M | Total Assets |
| 2.14B | 2.06B | 1.44B | 998.90M | 1.06B | 840.98M | Total Debt |
| 0.00 | 714.54M | 644.12M | 547.30M | 481.11M | 460.48M | Net Debt |
| -10.20M | 361.39M | 644.12M | 493.61M | 478.71M | 458.41M | Total Liabilities |
| 1.83B | 1.76B | 1.18B | 623.54M | 652.67M | 501.63M | Stockholders Equity |
| 302.28M | 296.28M | 249.05M | 375.36M | 403.89M | 339.35M |
| Cash Flow | Free Cash Flow | ||||
| -204.99M | -153.45M | -89.06M | -62.43M | 140.92M | 17.75M | Operating Cash Flow |
| -204.57M | -153.01M | -88.60M | -62.42M | 140.92M | 17.76M | Investing Cash Flow |
| -214.96M | -209.05M | -172.24M | -11.00K | -32.34M | -10.00K | Financing Cash Flow |
| 499.22M | 560.90M | 344.97M | 1.18M | -5.49M | 465.00K |
Newtek Business Technical Analysis
Negative
10.72
Price Trends
10.94
Negative
11.72
Negative
12.10
Negative
Market Momentum
0.08
Negative
48.47
Neutral
41.32
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 10.72 is above the 20-day moving average (MA) of 10.70, below the 50-day MA of 10.94, and below the 200-day MA of 12.10, indicating a neutral trend. The MACD of 0.08 indicates Negative momentum. The RSI at 48.47 is Neutral, neither overbought nor oversold. The STOCH value of 41.32 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 (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $173.49M | 9.57 | 6.38% | ― | 18.18% | 54.41% | |
75 Outperform | $236.19M | 11.97 | 8.67% | 11.32% | ― | ― | |
68 Neutral | $359.54M | 12.11 | 7.36% | 12.11% | -24.05% | 28.25% | |
67 Neutral | $206.63M | 22.59 | 3.07% | 17.17% | -27.52% | -46.85% | |
64 Neutral | $12.66B | 9.79 | 7.67% | 17015.07% | 12.23% | -6.06% | |
61 Neutral | $282.39M | 5.62 | 18.18% | 7.05% | 21.99% | 23.40% | |
59 Neutral | $268.35M | 7.20 | 10.68% | 19.26% | 22.53% | ― |
* Financial Sector Average
Performance Comparison
NEWT
Newtek Business
10.72
-1.72
-13.83%
SAR
Saratoga Investment
24.48
4.25
21.01%
WHF
WhiteHorse
9.01
-2.30
-20.34%
TPVG
TriplePoint Venture Growth
6.71
-1.33
-16.54%
SWKH
SWK Holdings
14.14
0.50
3.67%
LIEN
Chicago Atlantic BDC
10.17
-0.15
-1.45%
Newtek Business Earnings Call Summary
Earnings Call Date:May 06, 2025
(Q1-2025)
| % Change Since: 12.37%|
Next Earnings Date:Aug 12, 2025
Earnings Call Sentiment Neutral
NewtekOne, Inc. reported a positive earnings surprise and demonstrated strong performance in loan securitizations and deposit growth. However, challenges remain due to a tougher credit environment and ongoing issues with the NSBF portfolio. The company is proactively managing these challenges but acknowledges potential impacts from regulatory changes.Q1-2025 Updates
Positive Updates
Earnings Beat Expectations
First quarter 2025 earnings beat expectations with $0.35 diluted earnings per share, exceeding the consensus of $0.31.
Strong Loan Securitization Performance
Successful securitization of approximately $215 million of loans with a 570 basis point spread, indicating strong performance in the Alternative Loan Program.
Deposit Growth and Cost Management
Continued growth in core deposits with an expected decrease in the average cost of deposits from 4% to 3.8%-3.85% for 2025.
Improved Efficiency Ratio
Efficiency ratio improved from 71% to 62%, highlighting cost management and scalability of the digital banking model.
Pre-Provision Net Revenue Growth
Pre-provision net revenue increased by 47% year-over-year, driven by non-interest income activities.
Negative Updates
Challenging Credit Environment
Acknowledged tougher credit conditions and increased charge-offs, particularly in the SBA 7(a) loan portfolio.
NSBF Portfolio Challenges
NSBF loss of $4.9 million in Q1 2025, though reduced from $10.7 million in Q4 2024, indicating ongoing challenges in winding down this portfolio.
Potential Impact of SBA Changes
Concerns about SBA changes, including the return of the 55 basis point lender service fee, potentially impacting gain on sale margins.
Company Guidance
During the NewtekOne, Inc. First Quarter 2025 Earnings Conference Call, significant guidance was provided regarding financial performance and future expectations. The company reported a diluted earnings per share (EPS) of $0.35, beating the consensus estimate of $0.31, and maintained an annual EPS forecast of $2.10 to $2.50, indicating a projected annual EPS growth of 17%. The return on assets for the first quarter was 1.18%, compared to an average of 90 basis points for similarly sized banks. The provision for loan losses was increased, reflecting the company's anticipation of credit headwinds. The company also highlighted a shift in loan origination strategy, focusing on holding government-guaranteed SBA loans longer to benefit from high coupon rates. Additionally, NewtekOne reported a 47% increase in shareholder equity over two years and emphasized its unique business model, which relies heavily on non-interest income and digital banking solutions. The call also addressed the impact of recent SBA changes on gain-on-sale margins, with potential effects anticipated in Q3 and Q4. The management provided a detailed breakdown of the fair value gains, noting that $8 million was attributed to SBA loans and the remainder primarily to the Alternative Loan Program (ALP). The company projected growth in core deposits, with a shift towards more business deposits, and anticipated a slight decrease in the average cost of deposits to 3.8%-3.85% for the full year.Newtek Business Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
Newtek Business Announces Leadership Changes at Newtek Bank
Neutral
Apr 23, 2025
On April 21, 2025, Newtek Business announced leadership changes at Newtek Bank, N.A., with Nicolas Young resigning as President and COO, effective May 16, 2025. Peter Downs, previously the Chief Lending Officer, was appointed as the new President, effective April 22, 2025. Additionally, Frank DeMaria was named Chief Financial Officer of the company, while M. Scott Price continued as CFO of the bank. These appointments are part of strategic leadership restructuring aimed at strengthening the company’s operational and financial strategies.
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.