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Webster Financial (WBS)
NYSE:WBS
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Webster Financial
(NYSE:WBS)
73Outperform
Positive Factors
Earnings
4Q24 was a high quality earnings beat versus expectations, with operating EPS beating consensus on higher net interest income and fees.
Net Interest Income
Webster reported a solid quarter highlighted by strong NII results and an encouraging 4Q NII guide.
Securities Repositioning
Webster completed a $665 million securities repositioning during the quarter, generating a 300 basis point yield improvement.
Negative Factors
Asset Quality
Asset quality metrics deteriorated further in 4Q24, with nonperforming and commercial classified loans increasing.
Deposit Growth
Deposit growth for 4Q24 was guided to decline 1% sequentially, below prior estimates of a 1% increase.
Nonperforming Loans
Nonperforming and classified loans increased further in 3Q24.
Webster Financial (WBS) vs. S&P 500 (SPY)
Market Cap
$8.83B
Dividend Yield3.05%
Average Volume (3M)1.36M
Price to Earnings (P/E)11.9
Beta (1Y)1.43
Revenue Growth2.60%
EPS Growth-9.07%
CountryUS
Employees4,297
SectorFinancial
Sector Strength84
IndustryBanks - Regional
Share Statistics
EPS (TTM)1.31
Shares Outstanding168,229,100
10 Day Avg. Volume910,109
30 Day Avg. Volume1,362,347
Financial Highlights & Ratios
PEG Ratio6.70
Price to Book (P/B)0.94
Price to Sales (P/S)0.00
P/FCF Ratio9.54
Enterprise Value/Market Cap1.39
Enterprise Value/Revenue1.08
Enterprise Value/Gross Profit5.06
Enterprise Value/Ebitda4.20
Forecast
1Y Price Target
$61.73Price Target Upside17.25% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering11
Webster Financial Business Overview & Revenue Model
Company DescriptionWebster Financial Corporation operates as the bank holding company for Webster Bank, National Association that provides a range of banking, investment, and financial services to individuals, families, and businesses in the United States. It operates through three segments: Commercial Banking, HSA Bank, and Retail Banking. The Commercial Banking segment provides lending, deposit, and cash management services; commercial and industrial lending and leasing, commercial real estate lending, equipment financing, and asset-based lending, as well as treasury and payment services; wealth management solutions to business owners, operators, and consumers; and trust, asset management, financial planning, insurance, retirement, and investment products. The HSA Bank segment offers health savings accounts, health reimbursement arrangements, flexible spending accounts, and commuter services that are distributed directly to employers and individual consumers, as well as through national and regional insurance carriers, consultants, and financial advisors. The Retail Banking segment provides deposit and fee-based services, residential mortgages, home equity lines, secured and unsecured loans, and credit cards to consumers. The company also offers online and mobile banking services. As of December 31, 2021, it operated 130 banking centers and 251 ATMs. The company was founded in 1935 and is headquartered in Stamford, Connecticut.
How the Company Makes MoneyWebster Financial makes money primarily through interest income generated from loans and leases, including commercial loans, consumer loans, and residential mortgages. The company also earns revenue from investment securities and other financial products. Additionally, Webster Financial generates non-interest income through fees and service charges, including fees from deposit-related services, wealth management services, loan servicing, and treasury and payment solutions. The bank's profitability is influenced by its net interest margin, loan growth, asset quality, and operational efficiency. Strategic partnerships and a focus on expanding digital banking capabilities also play a significant role in enhancing Webster Financial's revenue streams.
Webster Financial Financial Statement Overview
Summary
Webster Financial shows strong financial growth with significant revenue and net income expansion. The balance sheet is robust with effective debt management. However, incomplete cash flow data limits a full assessment.Income Statement
Webster Financial's revenue has shown significant growth from $1.17 billion in 2020 to $3.93 billion in 2024, reflecting a robust expansion trajectory. The gross profit margin remains consistently high as gross profit is equal to total revenue. The net profit margin improved substantially, indicating better cost management and operational efficiency. The EBIT margin has also increased, showcasing strong operational performance. However, the absence of EBITDA data limits a full analysis of operational cash generation capabilities.85
Very Positive
Balance Sheet
The balance sheet is strong with a solid equity base growing steadily to $9.13 billion by 2024. The debt-to-equity ratio is healthy and shows a decrease over the years, suggesting effective debt management. The equity ratio is stable, indicating a solid asset base supporting equity. Return on equity has improved, showcasing enhanced profitability. However, the total liabilities have increased, which could pose a risk if not managed effectively.78
Positive
Cash Flow
Operating cash flow has been positive, although there is missing data for 2024. Free cash flow was strong in 2023, but unreported for 2024. The free cash flow to net income ratio showcases a capability to generate cash, but the missing data for 2024 limits a comprehensive evaluation. Financing cash flows have been high, reflecting capital management strategies. The absence of clear free cash flow growth rate and operating cash flow to net income ratio for 2024 presents an incomplete cash flow picture.70
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 3.93B | 2.50B | 2.47B | 1.22B | 1.17B | Gross Profit |
| 3.93B | 2.50B | 2.47B | 1.22B | 1.17B | EBIT |
| 3.91B | 1.09B | 1.05B | 533.86M | 279.97M | EBITDA |
| 0.00 | 0.00 | 880.65M | 575.37M | 323.15M | Net Income Common Stockholders |
| 768.71M | 867.84M | 644.28M | 408.86M | 220.62M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 9.39B | 1.52B | 8.73B | 4.70B | 3.59B | Total Assets |
| 79.03B | 74.95B | 71.28B | 34.92B | 32.59B | Total Debt |
| 3.02B | 3.41B | 6.53B | 573.93M | 700.83M | Net Debt |
| 521.13M | 1.69B | 5.69B | 112.36M | 437.72M | Total Liabilities |
| 69.89B | 66.26B | 63.22B | 31.48B | 29.36B | Stockholders Equity |
| 9.13B | 8.69B | 8.06B | 3.44B | 3.23B |
| Cash Flow | Free Cash Flow | |||
| 1.37B | 938.35M | 1.31B | 672.00M | 359.27M | Operating Cash Flow |
| 1.40B | 978.65M | 1.34B | 688.59M | 380.55M | Investing Cash Flow |
| -3.87B | -2.60B | -7.19B | -2.41B | -2.29B | Financing Cash Flow |
| 2.82B | 2.49B | 6.23B | 1.91B | 1.91B |
Webster Financial Technical Analysis
Positive
52.65
Price Trends
48.42
Positive
52.35
Positive
51.19
Positive
Market Momentum
1.50
Negative
63.92
Neutral
80.05
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WBS, the sentiment is Positive. The current price of 52.65 is above the 20-day moving average (MA) of 49.73, above the 50-day MA of 48.42, and above the 200-day MA of 51.19, indicating a bullish trend. The MACD of 1.50 indicates Negative momentum. The RSI at 63.92 is Neutral, neither overbought nor oversold. The STOCH value of 80.05 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for WBS.
Webster Financial Risk Analysis
Webster Financial disclosed 47 risk factors in its most recent earnings report. Webster Financial reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Webster Financial Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $8.46B | 14.45 | 15.26% | 2.87% | 5.99% | 7.75% | |
78 Outperform | $8.58B | 17.89 | 7.77% | 0.81% | 8.09% | -11.31% | |
76 Outperform | $8.75B | 16.27 | 16.82% | 1.60% | -4.27% | 17.70% | |
75 Outperform | $7.70B | 11.11 | 11.11% | 4.85% | -9.81% | 5.22% | |
73 Outperform | $8.83B | 11.91 | 8.59% | 3.05% | 2.60% | -9.07% | |
64 Neutral | $12.82B | 9.87 | 7.67% | 17000.34% | 12.39% | -5.85% | |
59 Neutral | $8.54B | 10.74 | 12.36% | 1.94% | 11.01% | 6.63% |
* Financial Sector Average
Performance Comparison
WBS
Webster Financial
52.65
8.05
18.05%
CMA
Comerica
58.12
7.17
14.07%
CBSH
Commerce Bancshares
64.99
11.76
22.09%
CFR
Cullen/Frost Bankers
131.50
29.25
28.61%
PNFP
Pinnacle Financial Partners
109.85
27.36
33.17%
WAL
Western Alliance
75.60
12.07
19.00%
Webster Financial Earnings Call Summary
Earnings Call Date:Apr 24, 2025
(Q1-2025)
| % Change Since: 12.55%|
Next Earnings Date:Jul 17, 2025
Earnings Call Sentiment Neutral
Webster Financial Corporation demonstrated solid operational performance with growth in deposits and loans, and improvements in net interest margin. However, economic uncertainty and increased provisions for credit losses present significant challenges. Overall, the highlights are balanced with the lowlights.Q1-2025 Updates
Positive Updates
Positive Loan and Deposit Growth
Deposit growth was consistent at 1.3% with significant contributions from core deposits. Loan growth was 1%, outpacing the market with notable contributions across business lines and loan categories.
Net Interest Margin Improvement
Net interest margin (NIM) increased by four basis points to 3.48%, despite a challenging interest rate environment, and the efficiency ratio was maintained at 45.8%.
Share Repurchases Highlight Capital Strength
Webster repurchased 3,600,000 shares during the quarter, reflecting confidence in the company's capital position.
Strong Capital and Liquidity Position
The tangible book value per common share increased over 3% from the last quarter to $33.97, and the loan-to-deposit ratio remained favorable at 81%.
Negative Updates
Increased Provision for Credit Losses
Provision for credit losses increased notably by $78 million due to a higher recession case probability, impacting net income which was down $24 million from the prior quarter.
Rising Nonperforming Assets
Nonperforming assets rose by 22%, largely attributed to healthcare and office portfolios, indicating potential challenges in these sectors.
Decline in Noninterest Income
Noninterest income fell by $7 million compared to the previous quarter, due in part to the absence of a unique transaction that contributed to the previous quarter's income.
Market Volatility and Economic Uncertainty
The macroeconomic environment remains uncertain, with potential impacts from tariffs and a cautious outlook on economic activity, delaying client investments.
Company Guidance
During Webster Financial Corporation's first quarter 2025 earnings call, the company provided detailed guidance and performance metrics. Key highlights included a 1.3% growth in deposits, robust core deposit growth, and a loan-to-deposit ratio of 81%, which offers significant flexibility. The net interest margin (NIM) expanded by four basis points to 3.48%, while the efficiency ratio stood at a strong 45.8%, indicating high profitability. Reported earnings per share (EPS) were $1.30, with a return on assets (ROA) of 1.15% and a return on tangible common equity (ROATC) just below 16%. Webster repurchased 3.6 million shares during the quarter, reflecting confidence in its financial position. The company's allowance for credit losses increased due to a higher recession probability, resulting in a $20 million addition to provisions, which they deemed prudent amidst economic uncertainties. Despite market volatility, the company maintained its full-year 2025 outlook, assuming a stable operating environment.Webster Financial Corporate Events
Financial Disclosures
Webster Financial Reports Strong Q1 2025 Earnings
Positive
Apr 24, 2025
Webster Financial Corporation reported a net income of $220.4 million, or $1.30 per diluted share, for the first quarter of 2025, reflecting an increase from the previous year’s first quarter. The company experienced growth in loans and deposits, with a revenue of $704.8 million and a net interest margin of 3.48 percent. Despite market volatility, Webster increased its allowance for credit losses to prepare for potential economic uncertainties. The company’s commercial banking segment reported $40.8 billion in loans and leases, highlighting its strong position in the financial services industry.
Spark’s Take on WBS Stock
According to Spark, TipRanks’ AI Analyst, WBS is a Outperform.
Webster Financial scores well due to solid financial performance and positive earnings call outlook, offset by some missing cash flow data and bearish technical indicators. The valuation is attractive, though regulatory challenges and credit risks are potential concerns.
To see Spark’s full report on WBS stock, click here.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.