NewtekOne is a financial holding company that provides business and financial solutions to the small and medium-sized business market.
Pros:
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- Strong Value Play: P/E ratio of 5.33, well below our threshold of 20
- Solid Dividend: 7.97% dividend yield with $0.76 annual dividend
- Growth in Book Value: Tangible book value per share grew 23% year-over-year to $10.17
- Strong Q1 Performance: Diluted EPS of $0.35, exceeding guidance of $0.28-$0.32
- Significant Insider Buying: Multiple executives including the CEO have been consistently purchasing shares over the past year
- Improving Efficiency: Efficiency ratio improved to 62.1% from 70.6% in Q1 2024
- Pre-Provision Revenue Growth: 47% year-over-year increase to $25.2 million
- Clear Catalyst: Forecasting 2025 EPS between $2.10-$2.50, targeting $1.0B in SBA 7(a) loan fundings
Cons:
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- Potential Interest Rate Sensitivity: As a financial institution, could face challenges if interest rates remain volatile
- Loan Portfolio Risk: Focused on small business lending, which could face pressure in an economic downturn
Assessment: NEWT strongly meets our value criteria with its exceptionally low P/E ratio of 5.33 and provides significant income through its 7.97% dividend yield. The consistent insider buying signals management’s confidence in the company’s prospects. The 23% growth in tangible book value provides both a solid floor and evidence of execution. With projected EPS growth and clear business expansion plans for 2025, NEWT has identifiable catalysts.
NEWT offers exceptional value with its low P/E ratio, provides significant income through its dividend, shows strong fundamental growth, and has clear catalysts for future appreciation. The consistent insider buying provides additional confidence in management’s outlook.
For investors seeking alternatives in the financial sector, bank stocks are broadly recommended by Wall Street analysts for 2025. The financial sector fund (XLF) has shown strong performance, increasing nearly 7% since November 5, 2024, outpacing the broader S&P 500.
In summary, NEWT offers the rare combination of deep value, income, growth, and potential catalysts that make it an attractive investment in the financial sector based on our criteria.
