Stock Analysis & Valuation NewtekOne, Inc. (NEWTH)

• Previous Close: $25.10
• Sector Valuation Confidence Level: High

Valuation method	Value, $	Upside, %
Artificial intelligence (AI)	96.12	283
Intrinsic value (DCF)	225.99	800
Graham-Dodd Method	9.33	-63
Graham Formula	78.58	213

Strategic Investment Analysis

Company Overview

NewtekOne, Inc. (NASDAQ: NEWTH) is a leading financial services provider specializing in business and financial solutions for small- and medium-sized businesses (SMBs). Operating as the holding company for Newtek Bank, National Association, it offers a diversified suite of services, including SBA loans, commercial lending, electronic payment processing, insurance brokerage, payroll management, and cloud-based technology solutions. Headquartered in Boca Raton, Florida, NewtekOne serves a broad clientele across industries such as retail, hospitality, healthcare, and professional services. The company’s integrated approach combines banking, fintech, and business services under one umbrella, positioning it as a one-stop financial partner for SMBs. With a strong digital infrastructure and a focus on tailored financial products, NewtekOne capitalizes on the growing demand for flexible, tech-enabled financial solutions in the SMB sector. Its rebranding from Newtek Business Services Corp. in 2023 reflects its evolution into a comprehensive financial services provider.

Investment Summary

NewtekOne presents a compelling investment case due to its diversified revenue streams, strong SMB market positioning, and high-margin financial services. The company benefits from recurring revenue through payment processing, payroll services, and cloud hosting, while its banking segment provides stable interest income. However, risks include exposure to economic cycles affecting SMBs, regulatory scrutiny in financial services, and competition from fintech disruptors. With a beta of 1.37, the stock exhibits higher volatility than the broader market. Investors should weigh its growth potential in digital financial services against its leveraged balance sheet (total debt of $1.69B vs. $381M cash). The dividend yield (~3.2% based on the latest payout) adds income appeal, but sustainability depends on earnings stability.

Competitive Analysis

NewtekOne’s competitive advantage lies in its hybrid model combining banking, fintech, and business services—a rarity among SMB-focused financial providers. Unlike traditional banks, it offers non-lending services (e.g., payment processing, payroll) that drive sticky client relationships. Its proprietary technology stack, including cloud-based POS systems, differentiates it from smaller regional lenders. However, it faces intense competition from both fintechs (e.g., Square, PayPal) and traditional banks expanding into SMB services. NewtekOne’s SBA lending expertise is a strength, but its smaller scale compared to national banks limits cost efficiencies. The company’s cross-selling capabilities—bundling loans with payment processing or insurance—provide a moat, though tech giants (e.g., Amazon Lending) pose long-term threats with embedded finance solutions. Its bank charter (since 2021) enhances funding flexibility but requires navigating stringent capital requirements. While its niche focus fosters deep SMB relationships, reliance on U.S. economic conditions creates cyclical risks.

Major Competitors

• Block, Inc. (SQ): Block (formerly Square) dominates SMB payment processing with its vertically integrated ecosystem (hardware, software, lending). Its Cash App and Afterpay acquisitions expand its reach, but it lacks a banking charter, limiting deposit-funded lending. NewtekOne’s broader service suite (e.g., insurance, payroll) offsets Block’s tech-centric approach.
• PayPal Holdings, Inc. (PYPL): PayPal’s scale in digital payments and Venmo’s ubiquity challenge NewtekOne in payment processing. However, PayPal’s limited lending presence and lack of banking services reduce direct competition. NewtekOne’s SBA loan expertise and FDIC-backed deposits provide stability PayPal lacks.
• SVB Financial Group (SIVB): SVB (prior to its 2023 collapse) was a tech/SMB lender with a strong venture debt focus. Unlike NewtekOne, it targeted high-growth startups rather than Main Street businesses. Its failure underscores NewtekOne’s conservative risk management in SBA lending.
• Western Alliance Bancorporation (WAL): Western Alliance offers commercial banking with a tech-enabled platform but lacks NewtekOne’s non-bank services (e.g., payroll, insurance). Its larger balance sheet provides cost advantages, but NewtekOne’s niche SMB focus allows for higher-margin specialty lending.
• LendingClub Corporation (LC): LendingClub’s marketplace model connects borrowers/investors digitally, competing with NewtekOne’s loan origination. However, LendingClub’s lack of deposit funding and ancillary services makes it less diversified. NewtekOne’s bank charter provides cheaper capital.