Kearny Financial Corp. – Value Analysis (NASDAQ:KRNY) : August 17, 2017

Capitalcube gives Kearny Financial Corp. a score of 46.

Our analysis is based on comparing Kearny Financial Corp. with the following peers – OceanFirst Financial Corp., Oritani Financial Corp., Northfield Bancorp, Inc., Provident Financial Services, Inc., Magyar Bancorp, Inc. and MSB Financial Corp (OCFC-US, ORIT-US, NFBK-US, PFS-US, MGYR-US and MSBF-US).

Fundamental Overview

Kearny Financial Corp. has a fundamental score of 46 and has a relative valuation of OVERVALUED.

Fundamental Score

Company Overview

  • It’s current Price/Book of 1.15 is about median in its peer group.
  • The market expects faster earnings growth from KRNY-US than from its peers and also a turnaround in its current ROE.
  • KRNY-US employs relatively high amounts of capital while generating median profit margins.
  • Changes in the company’s annual revenue and earnings are around the median among its peers.
  • KRNY-US‘s return on equity currently and over the past five years has trailed the peer median and suggests the company might be operationally challenged relative to its peers.
  • Compared with the peers chosen, KRNY-US has had faster revenue growth in prior years and a current P/E ratio that suggests faster growth in the future suggesting superior growth expectations.
  • The company’s equity capital investment program and to-date returns suggest that the company is likely making big bets on the future.

Drivers of Margin

  • Margins do not suggest any relative benefit from a pricing or an operating cost advantage.
  • The company’s net interest income (net interest income/total revenues) of 90.04% is around peer median suggesting that KRNY-US‘s lending operations does not benefit from any differentiating pricing advantage. In addition, KRNY-US‘s pre-tax margin of 24.07% is also around the peer median suggesting no operating cost advantage relative to peers.
  • The company’s proportion of fee based income (i.e. non interest income/total revenues) of 9.96% is around peer median. In addition, KRNY-US‘s proportion of overhead costs (i.e. non interest expense/total revenues) of 71.20x is also around peer median — suggesting no cost advantage on fee-based overhead operations.
Drivers of Margins

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Differentiated; High Cost, Commodity; High Cost, Commodity; Low Cost

Company Profile

Kearny Financial Corp. operates as a holding company for Kearny Federal Savings Bank. Its business includes the ownership and operation of the bank. The bank is engaged in the business of attracting deposits from the general public in New Jersey. It uses these deposits, together with other funds, to originate or purchase loans for its portfolio and invest in securities. The bank offers both personal and business services. The company is a unitary savings and loan holding company and conducts no significant business or operations of its own. The company was founded on September 2, 2014 and is headquartered in Fairfield, NJ.