NEWT
NewtekOne($NEWT) Executives, Including Chairman, Execute Cluster Buying After Stock Decline - Undervaluation Signal?
05/19/2025 14:43
Sentiment
Cluster Buy
C-Level
Summary
- At NewtekOne Inc ($NEWT), multiple insiders including Director Gregory Zink, Director Richard Salute, Chairman Barry Sloane, and EVP Frank Demaria executed cluster buying between May 9-16, following a stock price decline in early May.
- Chairman Barry Sloane has consistently made substantial purchases, including 40,134 shares ($472,403) in September 2024, signaling strong confidence in the company's value and future prospects.
- While Q1 EPS slightly declined to $0.35 year-over-year, revenue surged 94.1% to $113.12M, with a P/E ratio of 5.77 and dividend yield of 6.79% enhancing investment appeal despite anticipated increases in loan loss provisions.
POSITIVE
- Cluster buying by multiple insiders between May 9-16 indicates strong management confidence in the company's prospects.
- Chairman Barry Sloane's consistent large purchases, including 40,134 shares in September 2024, demonstrates conviction in long-term value.
- Q1 revenue surged 94.1% year-over-year, significantly exceeding analyst expectations.
- P/E ratio of 5.77 and dividend yield of 6.79% offer relative undervaluation and high income potential.
- Cost-reduction initiatives, including office lease terminations, are expected to contribute to improved efficiency (62.1%).
NEGATIVE
- Q1 EPS of $0.35 slightly decreased year-over-year, with net income before taxes declining by 11.1%.
- The company anticipates nearly doubling loan loss provisions, suggesting potential deterioration in small business lending conditions.
- Stock price remains approximately 18.5% lower than a year ago and has declined 28.5% over five years, indicating persistent long-term downtrend.
- Business model focused on small businesses may be vulnerable during economic downturns or periods of increased uncertainty.
Expert
NewtekOne's cluster insider buying represents a positive signal showing management's strong conviction following stock price decline. However, anticipated increases in loan loss provisions reflect concerns about economic uncertainty. The low P/E of 5.77 and high dividend yield of 6.79% are attractive to value investors, but volatility in the small business market and lending risks warrant monitoring.
Previous Closing Price
$10.85
-0.27(2.43%)
Average Insider Trading Data Over the Past Year
$12.11
Purchase Average Price
$13.1
Sale Average Price
$1.32M
Purchase Amount
$29.48K
Sale Amount
Transaction related to News
Trading Date | Filing Date | Insider | Title | Type | Avg. Price | Trans. Value |
|---|---|---|---|---|---|---|
05/31/2025 | 05/31/2025 | Sale | $ |
As NewtekOne Inc ($NEWT) shows signs of recovery following its sharp decline in early April, recent concentrated insider purchases have caught investors' attention. These insider buys, particularly in mid-May, signal strong confidence from management in the company's value and future growth prospects. Between May 9 and May 16, multiple insiders at NewtekOne consecutively purchased company shares. Director Gregory Zink initiated the buying spree on May 9, acquiring 2,000 shares at $10.39, followed by Director Richard Salute purchasing 5,000 shares at $11.06 on May 12. Chairman Barry Sloane made a substantial investment of 10,000 shares at $11.62 on May 13, and EVP Frank Demaria rounded out the cluster buying with 500 shares at $11.22 on May 16. This insider cluster occurred shortly after the stock had dropped to $9.54 in early May, with shares subsequently recovering to $11.20. Chairman Barry Sloane's buying pattern is particularly noteworthy. On September 23, 2024, he purchased a remarkable 40,134 shares at $11.77, representing a $472,403 investment, and has made several other purchases ranging from 3,000 to 6,649 shares throughout the year. With over 30 years of experience in the financial industry, Sloane founded Newtek in 1998, later transforming it into a Business Development Company (BDC) in 2014, and then restructuring it as a bank holding company in 2023, demonstrating his strategic vision for the company's evolution. These insider buying signals should be evaluated alongside NewtekOne's recent financial performance. In its Q1 2025 results announced on May 7, the company reported earnings per share (EPS) of $0.35, exactly meeting analyst expectations but slightly down from $0.38 in the same period last year. However, revenue surged 94.1% year-over-year to $113.12 million, significantly exceeding the forecasted $63.22 million. NewtekOne operates as a financial holding company providing services to small businesses, with particular strength in Small Business Administration (SBA) lending. Since converting to Newtek Bank in 2023, the company has diversified its business services to include banking services, electronic payment processing, and technology solutions. In Q1 2025, NewtekOne generated approximately $213.4 million in SBA 7(a) loans, slightly up from $211.5 million in the same period last year, while also originating $68.5 million through its Alternative Loan Program (ALP). Notably, while net income before taxes decreased by 11.1% year-over-year to $11.6 million, pre-provision net revenue (PPNR) increased by 47.0% to $25.2 million compared to the prior year. Recently, NewtekOne has undertaken cost-reduction initiatives, including terminating three office leases, expected to save approximately $2 million annually starting in Q2 2025. This, coupled with an improvement in the efficiency ratio to 62.1% from 70.6% a year ago, should contribute to enhanced profitability. Currently, NewtekOne trades at a P/E ratio of 5.77, which is low compared to both historical and industry averages. Additionally, its high dividend yield of 6.79% presents an attractive proposition for income-focused investors. The company has provided 2025 EPS guidance in the range of $2.10 to $2.50, implying growth of approximately 17%. However, investors should be mindful of several risk factors. The company anticipates nearly doubling its loan loss provisions, suggesting potential deterioration in the small business environment amid economic uncertainties. Moreover, the stock price remains approximately 18.5% lower than a year ago and has declined 28.5% over the past five years. Considering the insider trading patterns and the company's financial performance collectively, the recent cluster buying suggests management believes the current stock price undervalues the company's intrinsic worth. The consistent purchasing by the chairman and executives reflects confidence in the company's long-term outlook. Nevertheless, economic uncertainties and lending-related risks remain factors that could contribute to short-term volatility.
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