Newtek Business Services (NEWT), Stock Analysis Report by Division One Finance

Stock Analysis report and price target on Newtek Business Services written by D'ron Forbes.
By: Division One Finance
 
QUEENS, N.Y. - Dec. 18, 2021 - PRLog -- Business development has always been an interest of mine. While I do have great ideas for how a business should be ran, the ability to invest into a company that finances thousands of new projects is ideal for my type of investing. My idea about investing in this type of company is that I can be a silent partner in thousands of small businesses. Business development companies create tons of free cash flow which over time gets returned to investors, Newtek Business Services (NEWT)  is a prime example. Over the past 10 years, investors in this company have seen a 1,083% total return. The growth of the stock has been steady and is set up remain steady for years to come.

Catalysts for Continued Growth

- Newtek generates a ton of free cash flow, which cuts down time for return on investment.

- Dividend yield is impressive and well covered by cash flows which should reign in long term dividend investors.

- The company offers full a plate of solutions for small businesses which maximizes their income from new partners.

Valuations and Stock Analysis Report

The overall finances of Newtek are extremely impressive and make the investment worthwhile. Over $327 million in revenue with zero cost of goods leaves the company with an 81.2% profit margin over the past 12 months. They have over $200 million in cash on their balance sheet, with only $125 million in current liabilities. Their free cash flow yield of over 53.3% is the highlight of the financial statement, showing extreme promise of generating returns for their investors.

There has been a decrease in earnings and revenue quarter over quarter but the valuations more than make up for the shift. Price to Earnings is a 7.67 which is 23% below the sector median. Price to sales is a 6.23 and Price to Book is a 1.68, both of which are competitive valuations in the sector.

Overall for Newtek Business Services the pros outweigh the cons and I feel they are on pace to continue to live up to their reputation of generating returns for their investors. I see a 94% growth in the stock through 2023 given the high free cash flow yield.  Based on my evaluation of the financial statements I have set a price target of $53 per share.

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