TPS Position Update – June 8, 2016
. . . . BROADWAY FINANCIAL CORP (BYFC) – HOLD
We recommended Broadway Financial in January at $1.47. It reached $2.08 within a few months for a handsome 41% return.
The stock has given back some of its gains. But we continue to believe the best lies ahead for this Los Angeles bank.
When financial results were released for the first quarter of 2016 last month, we were delighted to see an important foundation laid for future growth.
Loan originations for multi-family loans were up 10.4% to $27.8 million. We were also happy to see more work being done to clean up what used to be a toxic balance sheet. Broadway’s delinquent loans at the end of Q1 were $1.1 million, or just 0.29% of total assets.
On the downside, Q1 2016 net interest income was off $288 thousand, a 9.7% slide.
It’s tough to keep net interest income strong when rates are low, and Broadway could do a better job charging higher fees.
But when interest rates climb, and we expect a modest increases later in the year and into 2017, Broadway will be in a better position to increases its profits.
We like what management has been doing on both the multi-family loan front and to solidify the financials. More growth in the price of the stock should reflect both of these efforts.
. . . . GOLDFIELD CORP. (GV) – HOLD
There’s a lot of history here. It’s an interesting history that stretches back farther than most stocks traded on the New York Stock Exchange.
Goldfield has been traded since 1906. And when financial results were released last week for 2015, we saw some solid numbers.
(Not exactly historic, but solid.)
Revenue was up 22.6% to $120.6 million from $98.4 million. Net income grew to $4.5 million from a net loss of $319,000.
This is quite an achievement, given the revenue hits the company took during the first two quarters of the year.
Goldfield is in the utility construction business. When high voltage power lines need to go up, Goldfield is one of the firms that’s often involved in these large-scale projects.
The company focuses geographically, concentrating on construction and maintenance projects in Texas, southeastern states, and mid-Atlantic states.
More large-scale projects are what the company needs, and the signs for a busy year ahead are encouraging. When you examine the business in Goldfield’s project pipeline, the one-year construction backlog has held steady year-over-year.
This backlog needs to grow. Right now it’s at $84.7 million. The bigger the backlog, the better.
Earlier this year, the stock traded at $1.13. Tuesday it closed at $3.11.
We recommended GV in April 2015 at $1.67. With backlog growth, and some cooperation from the weather so projects aren’t slowed down, we expect good things from Goldfield.
Action To Take
- HOLD BROADWAY FINANCIAL CORP (BYFC)
- HOLD GOLDFIELD CORP. (GV)
Category: TPS Update
