Long-established in the Banks industry, KeyCorp (KEY, Financial) has enjoyed a stellar reputation. However, it has recently witnessed a daily loss of 0.65%, juxtaposed with a three-month change of 6.84%. 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: 3/10
- Profitability rank: 5/10
- Growth rank: 3/10
- GF Value rank: 6/10
- Momentum rank: 10/10
Based on the above method, GuruFocus assigned KeyCorp a GF Score of 69 out of 100, which signals poor future outperformance potential.
Understanding KeyCorp's Business
With a market cap of $14.27 billion and sales of $6.215 billion, KeyCorp operates with a significant presence in the financial sector. The Ohio-based company, boasting assets of over $170 billion, has a bank footprint spanning 16 states, with a strong concentration 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, recent financial metrics suggest that KeyCorp may face challenges ahead.
Financial Strength Breakdown
KeyCorp's financial strength indicators present some concerning insights about the company's balance sheet health. A financial strength rank of 3/10 is indicative of potential vulnerabilities. The company's low cash-to-debt ratio at 0.04 suggests that KeyCorp may struggle to manage its debt obligations effectively. Furthermore, the company's debt-to-Ebitda ratio is not available, which could imply a lack of sufficient earnings to cover its debt, a situation that is worse than 0% of 31 companies in the Banks industry. This raises red flags about the company's financial resilience.
Profitability Breakdown
KeyCorp's Profitability rank of 5/10 also raises warning signals. The company's Net Margin has seen a significant decline over the past five years, with figures dropping from 27.78% in 2019 to just 15.56% in 2023. This downward trend in profitability could be a cause for concern among investors, as it may reflect underlying issues in the company's ability to generate profits relative to its revenues.
Growth Prospects
A lack of significant growth is another area where KeyCorp seems to falter, as evidenced by the company's low Growth rank. The company's revenue has not shown growth over the past three years, which is concerning when compared to the broader industry. In a rapidly evolving market, stagnating revenues may pose significant concerns. Additionally, KeyCorp's predictability rank of one star out of five adds to investor uncertainty regarding the consistency of revenue and earnings.
Next Steps
Considering KeyCorp's financial strength, profitability, and growth metrics, the GF Score highlights the firm's position for potential underperformance. Investors should exercise caution and conduct thorough due diligence when considering KeyCorp as part of their investment portfolio. For those seeking more robust investment opportunities, GuruFocus Premium members can explore companies with strong GF Scores using the 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.
