Live Oak Bancshares

LOB

Banks - Regional · Financial Services

Price

$42.48

-1.21 (-2.77%)

Market Cap

$1.97B

Exchange

New York Stock Exchange

Winston Score

Winston is curious

A decent business — some strong pillars, some weaker.

Share count rising — dilution

+2.7% over 4y

The company has issued more shares over this period, which dilutes each existing shareholder’s stake.

Diluted shares outstanding: 45.1M (2021) → 46.3M (2025)

Live Oak Bancshares is a bank based in Wilmington, North Carolina that focuses almost entirely on lending to small business owners across the United States. Instead of running traditional branch locations, it operates digitally and specializes in loans backed by the Small Business Administration (SBA), making it one of the largest SBA lenders in the country. Its main customers are small business owners in specific industries like veterinary practices, dental offices, funeral homes, and agriculture.

Live Oak makes money primarily through interest income on loans and by selling SBA-guaranteed portions of those loans on the secondary market, which generates fee income. It operates nationwide but has no physical branch network, keeping costs lower than traditional banks. The company also owns a stake in fintech businesses, including a banking software platform called Finxact. Its biggest risk is interest rate sensitivity — when rates shift, loan demand and profit margins on its lending business can change quickly.

Winston Score History

Growth Profile

For growth stock investors

When traditional metrics don't capture the full picture, these are the signals growth stock investors use instead.

Revenue Growth

+10.0% YoY

YoY Growth Rate

Slow revenue growth

EPS Growth

+190.5% YoY

YoY Growth Rate

EPS growth accelerating

R&D Spend

$0/ year

0.0% of revenue

Below sector average (7%)

Research and development spending

Insider Activity

22.3%ownership

Insiders own a meaningful stake in the company

Cash Position

Cash flow positive

$14.1B cash & investments

Quarterly Free Cash Flow

↓ Burn rate worsening

Company generates more cash than it spends — no dilution risk from fundraising

Growth context

Live Oak Bancshares is growing revenue at 10% year-over-year. The Winston Score measures business quality today — these growth metrics show what could matter tomorrow.

The Winston Score above measures business quality today. Growth stocks often score lower because they invest in the future rather than maximising current profits. These metrics show what matters most for evaluating that future.

Score breakdown

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Quality

Gross Margin

48.2%

Healthy — 48.2% gross margin

Operating Margin

15.4%

Healthy — 15.4% operating margin

ROCE

2.9%

Weak — 2.9% return on capital

ROIC between 0% and 5%. They earn a few cents back per dollar invested in the business.

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Growth

Sales YoY

+12.7%

Fast-growing sales (12.7% YoY)

EPS YoY

+101.5%

Earnings growing fast (101.5% YoY)

Earnings growing 25%+ a year. The compounder zone.

EPS Consistency

6/8 quarters

Earnings grew in most of the last 8 quarters

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Cash Flow

Cash Conversion

113%

Turns 113% of profit into real cash

FCF Margin

11.8%

Modest free cash flow (11.8%)

FCF margin between 10% and 20%. Every $100 in sales becomes $10 to $20 in real cash.

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Stability

Debt / Equity

0.08

Conservative — low debt load (0.08)

Interest Cover

0.41x

Dangerous — barely covers interest (0.4x)

Interest coverage below 1. Their profits don't cover the interest bill.

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Valuation

P/E Ratio (TTM)

16.1x

Fair value — P/E 16.1

P/E in the normal range. Price is roughly $15 for every $1 of yearly profit.

P/E vs Forward

+2.7

GROWING

Earnings expected to grow — slightly cheaper on forward P/E

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Dividends

Dividend Yield

0.29%

Small dividend — 0.29% yield

Modest yield. The bulk of any return needs to come from price appreciation.

Dividend Growth

+0.0%

Dividend flat

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