Simply Wall St
4 min read
Capitol Federal Financial earnings and dividend snapshot
Capitol Federal Financial (CFFN) just released fourth quarter and full year results, reporting net interest income of US$54.83 million for the quarter and US$211.9 million for the year.
The bank also posted quarterly net income of US$22.38 million and full year profit of US$86.4 million, figures that give investors fresh context for assessing the stock following the October 28 announcement.
Capitol Federal Financial’s recent earnings and dividend news comes after a mixed price stretch, with the share price down 7.36% over the past 90 days, yet still showing a 26.01% year-to-date share price return and a 46.95% one-year total shareholder return.
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Capitol Federal Financial now offers recent profit figures, a fresh dividend and a share price that has cooled after a strong year. Does that mix still skew the risk reward in favour of new buyers?
Preferred Price-to-Earnings of 11.8x: Is it justified?
Valuation on Capitol Federal Financial today hinges on a fairly straightforward signal. The shares last closed at $8.43 and sit on a P/E of 11.8x that screens as only modestly different from both peers and the wider US market.
The P/E metric focuses on what investors are currently paying for each dollar of reported earnings. For a bank such as Capitol Federal Financial, it effectively condenses views on profitability, loan quality and capital discipline into a single figure, which is why many investors lean on it when comparing listed lenders.
At 11.8x earnings, the stock trades slightly below the broader US market multiple of 18x, yet marginally above the US Banks industry average of 11.3x. That mix suggests investors are not heavily discounting the business, but they are also not granting a premium despite CFFN’s track record of earnings growth, high quality past profits and more recent improvement in profit margins. The fair P/E estimate of 10.8x is lower than the current level. This points to a valuation that could move down if the market ever aligns more closely with that fair ratio.
Explore the SWS fair ratio for Capitol Federal Financial.
Result: Price-to-Earnings of 11.8x (OVERVALUED)
Still, the recent 7.36% three month share price decline, along with any shift in loan quality or funding costs, could quickly challenge the current Capitol Federal Financial valuation story.
