| Valuation method | Value, £ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 59.30 | 348 |
| Intrinsic value (DCF) | 4.64 | -65 |
| Graham-Dodd Method | 7.10 | -46 |
| Graham Formula | 46.80 | 253 |
Newtek Business Services Corp. (0K7X.L) is a leading business development company (BDC) specializing in financial and business services for small and medium-sized enterprises (SMEs) in the United States. Headquartered in Boca Raton, Florida, with additional offices across key U.S. markets, Newtek provides a comprehensive suite of solutions, including small business loans (SBA loans), electronic payment processing, managed technology services, and insurance products. The company operates through segments such as Electronic Payment Processing, Managed Technology Solutions, Small Business Finance, and Capcos, catering to diverse SME needs. Newtek’s strategic alliances with institutions like American International Group (AIG) and Navy Federal Credit Union enhance its service offerings. With a focus on both debt and equity investments, Newtek supports businesses with financing ranging from $50,000 to $10 million, targeting sectors like commercial real estate, franchises, and working capital. Its proprietary Newtek Advantage platform integrates eCommerce, payroll, and loan management, positioning the company as a one-stop financial and operational partner for SMEs. As a publicly traded BDC, Newtek combines financial expertise with technology-driven solutions, making it a key player in the U.S. SME financial services landscape.
Newtek Business Services Corp. presents a compelling investment case due to its diversified revenue streams and strong foothold in the U.S. SME financial services market. The company’s focus on SBA loans and electronic payment processing provides stable cash flows, while its technology-driven platforms like Newtek Advantage enhance scalability. However, risks include its high leverage (total debt of $1.69 billion) and exposure to economic cycles affecting SME credit quality. The stock’s beta of 1.32 indicates higher volatility relative to the market. Despite a negative operating cash flow in the latest period, Newtek’s net income of $50.9 million and a diluted EPS of $1.96 reflect profitability. The dividend yield, supported by a $0.76 per share payout, may appeal to income-focused investors. Investors should weigh the company’s growth potential against sector competition and interest rate sensitivity.
Newtek Business Services Corp. competes in the crowded SME financial services sector, differentiating itself through a hybrid model combining lending, payment processing, and technology solutions. Its competitive advantage lies in its integrated platform (Newtek Advantage), which consolidates multiple SME services into a single interface, enhancing customer stickiness. The company’s specialization in SBA loans provides regulatory advantages and lower default risks compared to conventional lenders. However, Newtek faces stiff competition from larger BDCs like Ares Capital and traditional banks with deeper capital pools. Its technology-driven approach gives it an edge over pure-play lenders but requires continuous innovation to compete with fintech disruptors like Square and PayPal. Newtek’s partnerships with institutions like AIG and credit unions expand its distribution network, though reliance on third-party alliances introduces execution risks. The company’s regional focus (e.g., New York, Louisiana) may limit national scalability compared to nationwide competitors. Overall, Newtek’s niche positioning and diversified offerings provide resilience, but its smaller scale and debt load necessitate careful monitoring of credit performance and interest rate exposure.