NEWT revealed its first-quarter book value per share at $10.73, showcasing solid outcomes amid a challenging economic landscape. The company achieved diluted earnings per share of $0.35, surpassing the guidance provided in February. The firm continues to exhibit strong balance sheet and tangible book value growth, coupled with above-average profitability.
NEWT's success in generating $0.35 per diluted share, despite increased loan loss provisions, highlights its robust business model. This achievement underscores the company's strength in maintaining wide lending margins and efficient operations. Their financial performance in the first quarter reflects a profitability rate approximately double that of banks with assets between $1 billion and $10 billion, affirming their strategic positioning in the banking sector.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 5 analysts, the average target price for NewtekOne Inc (NEWT, Financial) is $14.24 with a high estimate of $18.70 and a low estimate of $10.00. The average target implies an upside of 49.27% from the current price of $9.54. More detailed estimate data can be found on the NewtekOne Inc (NEWT) Forecast page.
Based on the consensus recommendation from 7 brokerage firms, NewtekOne Inc's (NEWT, Financial) average brokerage recommendation is currently 2.9, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for NewtekOne Inc (NEWT, Financial) in one year is $32.06, suggesting a upside of 236.06% from the current price of $9.54. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the NewtekOne Inc (NEWT) Summary page.
NEWT Key Business Developments
Release Date: February 27, 2025
- Earnings Per Share (EPS): $0.70 per basic, $0.69 per diluted, a 43% improvement over the prior year and quarter.
- Net Interest Income: Increased by 36% over the same three-month period a year earlier.
- Shareholders' Equity: $296 million, a 19% increase.
- Alternative Loan Program (ALP) Loans: $269 million for the 12 months, with $83 million in ALP loans.
- Return on Average Assets (ROAA): 6.3% for Newtek Bank.
- Return on Tangible Common Equity (ROTCE): 48% for Newtek Bank.
- Efficiency Ratio: 42% for Newtek Bank.
- Core Business Deposits: Grew to $216 million, a $106 million increase from December 31, 2023.
- Net Charge Offs: $5.1 million or 154 basis points for the quarter when annualized.
- Non-Interest Income: Increased by $12 million for the quarter.
- ALP Portfolio Growth: $90 million increase versus the prior quarter.
- 2025 Earnings Per Share Forecast: Increased to a range of $2.10 to $2.50.
- 2025 Projected Midpoint EPS: $2.30, indicating growth over the 2024 diluted EPS of $1.96.
- Provision for Credit Losses: Increased due to migration to non-accrual and net charge offs.
- Income Tax Rate: Expected to be 26% for the 2025 year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- NewtekOne Inc (NEWT, Financial) reported a 43% improvement in earnings per share compared to the previous year, indicating strong financial performance.
- The company experienced a 36% increase in net interest income over the same period last year, showcasing growth in this segment.
- NewtekOne Inc (NEWT) achieved a 19% increase in shareholders' equity, while maintaining a healthy dividend payout.
- The company has successfully transitioned from a business development corporation to a financial holding company, owning a nationally chartered bank.
- NewtekOne Inc (NEWT) has a diversified loan portfolio with a strong focus on technology-enabled client acquisition, enhancing efficiency and customer satisfaction.
Negative Points
- The company anticipates higher charge-offs in the coming year, which could impact profitability.
- There is a noted concern about the potential for increased credit risk, particularly in the 7A loan portfolio.
- The transition from a business development corporation to a bank holding company has been complex and may continue to pose challenges.
- NewtekOne Inc (NEWT) faces a competitive banking environment, with pressure on deposit rates and customer retention.
- The company's stock is trading at a discount compared to peers, which may reflect market concerns about its business model and credit risk exposure.
