On Thursday, Keefe, Bruyette & Woods (KBW) adjusted its price target for Capitol Federal Financial (NASDAQ:CFFN), reducing it to $6.00 from the previous $7.00. Despite this change, KBW maintained a Market Perform rating for the stock.
Capitol Federal Financial recently reported quarterly earnings of $0.11 per share, which aligned with the consensus and KBW's expectations. The company's net interest margin (NIM) saw an increase of 11 basis points, reaching 1.82%. This improvement was attributed to the securities restructuring Capitol Federal Financial undertook in late 2023. However, the firm experienced a 3% decline in loans compared to the last quarter, with a particular decrease in 1-4 family loans. Conversely, deposits saw an 8% increase from the last quarter.
The company's fee income and expense trends remained steady, and the overall credit health was reported to be stable. Despite these positives, KBW anticipates that the margin will continue to face pressure in a persistent high-interest rate environment. Additionally, due to a reduced earning asset base, KBW has revised its net interest income projections downward.
As a result of these factors, KBW has also adjusted its fiscal year 2024 and 2025 earnings per share estimates, reducing them by $0.02 for each year. The new price target reflects KBW's reiteration of a Market Perform rating for Capitol Federal Financial.
InvestingPro Insights
InvestingPro data paints a nuanced picture for Capitol Federal Financial (NASDAQ:CFFN) with a current market capitalization of $637.72 million and a negative P/E ratio of -5.53, indicating that the company has faced challenges in generating profits over the last twelve months. The price to book ratio stands at 0.61, suggesting that the stock may be undervalued relative to its assets. Despite a significant decline in revenue by 120.87% in the last twelve months as of Q2 2024, Capitol Federal Financial maintains a robust dividend yield of 6.56%, which is a testament to its commitment to returning value to shareholders as highlighted by its 26 years of consistent dividend payments.
In light of the recent earnings report and the adjustments by KBW, investors should consider the following InvestingPro Tips: Capitol Federal Financial is expected to see net income growth and sales growth in the current year. Additionally, the company has a strong history of dividend payments, a significant factor for income-focused investors. For those interested in further analysis and additional tips, InvestingPro offers more insights on Capitol Federal Financial, which can be found at https://www.investing.com/pro/CFFN. To get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, use coupon code PRONEWS24. There are 7 more InvestingPro Tips available that could guide investors in making a more informed decision regarding Capitol Federal Financial.
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