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Newtek Business Services Corp. 5.50% Notes Due 2026 (NEWTZ)

Company Dividend Discount ModelIndustry: Asset ManagementSector: Financial Services

Valuation Snapshot

Stable Growth$33.93 - $62.14$45.59
Multi-Stage$34.63 - $37.85$36.21
Blended Fair Value$40.90
Current Price$11.45
Upside257.22%
DecisionBuy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2024202320222021202020192018201720162015
DPS-59.56%0.00%0.020.552.502.721.651.581.261.091.060.59
YoY Growth---96.88%-78.08%-7.98%64.72%4.45%25.70%15.02%3.29%80.66%0.00%
Dividend Yield--0.14%4.80%19.56%10.19%6.19%11.97%6.38%6.05%6.24%4.69%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)59.30
(-) Cash Dividends Paid (M)26.17
(=) Cash Retained (M)33.12
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)11.867.414.45
Cash Retained (M)33.1233.1233.12
(-) Cash Required (M)-11.86-7.41-4.45
(=) Excess Retained (M)21.2725.7128.68
(/) Shares Outstanding (M)25.7825.7825.78
(=) Excess Retained per Share0.821.001.11
LTM Dividend per Share1.011.011.01
(+) Excess Retained per Share0.821.001.11
(=) Adjusted Dividend1.842.012.13
WACC / Discount Rate9.08%9.08%9.08%
Growth Rate3.47%4.47%5.47%
Fair Value$33.93$45.59$62.14
Upside / Downside196.31%298.20%442.69%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)59.3061.9564.7167.6170.6373.7876.00
Payout Ratio44.14%53.31%62.48%71.65%80.83%90.00%92.50%
Projected Dividends (M)26.1733.0240.4348.4457.0966.4170.30

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate9.08%9.08%9.08%
Growth Rate3.47%4.47%5.47%
Year 1 PV (M)29.9830.2730.56
Year 2 PV (M)33.3433.9834.64
Year 3 PV (M)36.2637.3238.41
Year 4 PV (M)38.8040.3241.89
Year 5 PV (M)40.9843.0045.10
PV of Terminal Value (M)713.56748.71785.24
Equity Value (M)892.92933.62975.83
Shares Outstanding (M)25.7825.7825.78
Fair Value$34.63$36.21$37.85
Upside / Downside202.45%216.23%230.53%

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