Long-established in the Banks industry, KeyCorp (KEY, Financial) has enjoyed a stellar reputation. It has recently witnessed a daily gain of 0.04%, juxtaposed with a three-month change of 12.89%. However, fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of KeyCorp.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 2/10
- Profitability rank: 5/10
- Growth rank: 4/10
- GF Value rank: 10/10
- Momentum rank: 4/10
Based on the above method, GuruFocus assigned KeyCorp a GF Score of 66 out of 100, which signals poor future outperformance potential.
Understanding KeyCorp's Business
With a market cap of $11.65 billion and sales of $6.55 billion, KeyCorp operates with significant influence in the banking sector. The Ohio-based company, boasting assets of over $170 billion, has a bank footprint spanning 16 states, with a strong presence in Ohio and New York. KeyCorp is primarily focused on serving middle-market commercial clients through a hybrid community/corporate bank model. Despite its substantial market presence, the company's operating margin is currently not applicable, indicating an area that requires further scrutiny.
Financial Strength Breakdown
KeyCorp's financial strength indicators present some concerning insights about the company's balance sheet health. The financial strength rank of 2 out of 10 is particularly alarming, suggesting that the company's financial foundation may not be as robust as desired. This is further compounded by the company's low cash-to-debt ratio at 0.03, indicating a struggle in handling existing debt levels. Moreover, the company's debt-to-Ebitda ratio is not available, which could be a red flag unless tangible assets cover the debt, as noted by investment expert Joel Tillinghast.
Profitability Breakdown
KeyCorp's Profitability rank of 5 out of 10 also raises warning signals. The company's Net Margin has seen a decline over the past five years, with a decrease of 9.97%. The net margin percentages from 2018 to 2022 are 30.31%, 27.78%, 20.69%, 37.30%, and 27.28%, respectively. This downward trend in profitability metrics could be indicative of underlying issues in operational efficiency or market competition.
Growth Prospects
The company's low Growth rank of 4 out of 10 is another area where KeyCorp seems to falter. This suggests that the company may not be capitalizing on opportunities for significant growth or may be facing challenges in expanding its market share. The absence of a revenue chart here underscores the need for a closer examination of the company's growth strategies and market dynamics.
Next Steps
Considering KeyCorp's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. Investors should be cautious and may want to look for companies with stronger GF Scores to enhance their portfolios. GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
