On Thursday, Capitol Federal Financial (NASDAQ:CFFN) saw its price target lowered by Piper Sandler from $6.00 to $5.50, while the firm retained a Neutral rating on the stock. The adjustment followed the company's report of fiscal second-quarter 2024 earnings per share (EPS) of $0.11, which was in line with Piper Sandler's estimate and the consensus among analysts.
The reported net interest income (NII) was slightly below Piper Sandler's forecast by $0.01 per share, attributed to a reduced earning asset base. Despite this, Capitol Federal's net interest margin experienced an increase, rising 11 basis points to 1.82%, which was marginally above the anticipated 1.81%.
Capitol Federal's core fee income did not meet expectations, coming in slightly lower than projected. However, the impact of this revenue shortfall was mitigated by the provision for credit losses being smaller than Piper Sandler had modeled. Additionally, the company's expenses were lower than anticipated, which contributed to balancing the lower revenue figures.
The earnings report and subsequent price target adjustment by Piper Sandler indicate a steady performance by Capitol Federal, matching analyst expectations for EPS. The company's ability to manage a smaller provision for credit losses and keep expenses under control helped offset the lower-than-expected revenue from core fee income and net interest income.
The new price target of $5.50 reflects the latest financial outcomes and market conditions relating to Capitol Federal Financial as it continues to navigate the economic environment of fiscal year 2024.
InvestingPro Insights
Following Piper Sandler's revised price target for Capitol Federal Financial, current metrics from InvestingPro provide additional context on the company's financial health and market position. With a market cap of $635.1 million, the company's valuation reflects cautious investor sentiment, as evidenced by a negative P/E ratio of -6.05, which adjusts slightly to -5.44 when looking at the last twelve months as of Q2 2024. This negative P/E ratio indicates that investors are not currently paying for earnings, which aligns with the company's lack of profitability over the past year.
Despite these challenges, Capitol Federal Financial offers a notable dividend yield of 6.56%, a compelling aspect for income-focused investors. This is particularly noteworthy as the company has maintained dividend payments for an impressive 26 consecutive years. Additionally, analysts predict a return to profitability this year, providing a potential upside for investors considering the recent price decline of nearly 18% year-to-date.
For those seeking a deeper dive into Capitol Federal Financial, InvestingPro offers additional insights. There are 7 more InvestingPro Tips available that can further guide investment decisions, including expectations for net income and sales growth. To access these valuable tips and more, consider using the coupon code PRONEWS24 to get an extra 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
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