Nasdaq:FCAP
FIRST CAPITAL INC
A financially robust entity leveraging $1.19B in assets to generate stable $12M+ annual net income through strategic capital market investments and financing operations.
Key Metrics
Investment Thesis
Bull Case
Investors may be attracted by the company's impressive cash flow generation with operating cash flows of $22.3M significantly outpacing net income, indicating high quality earnings potential once non-cash items are normalized. The substantial increase in cash reserves from $38.7M to $105.9M provides a strong safety margin and capacity for future strategic acquisitions or dividend growth if capital allocation policies shift.
Bear Case
The stock faces headwinds from stagnant revenue trends over the last three years, which could signal an inability to capture market share or grow its fee base in a competitive financial landscape. Additionally, the company reports significant accumulated other comprehensive income losses of -$23.0M and retained earnings deficits, suggesting underlying capital erosion that may not be fully reflected in current net profit figures.
About FIRST CAPITAL INC
FIRST CAPITAL INC (FCAP) operates as a financial services entity with a diverse revenue stream, managing substantial assets of $1.19 billion while maintaining a robust operating profit of $14.2 million. The company generates revenue through capital markets activities, evidenced by significant investing cash flows and markable security purchases, serving clients across the broader financial sector. Despite a flat revenue trend over the last three years, the firm demonstrates consistent profitability with net income hovering around $12 million annually.
Analysis
Management Discussion
The company maintained stable financial performance with revenue holding steady between $7.0M and $7.1M while net income remained consistent near $12M, demonstrating operational resilience despite a challenging macroeconomic environment. However, the significant non-cash adjustments of -$27.8M and other non-operating losses suggest that reported profitability relies heavily on accounting treatments rather than pure cash generation from core activities.
Industry Overview
The financial services industry is characterized by intense competition, regulatory scrutiny, and sensitivity to interest rate cycles, requiring firms to maintain high efficiency ratios and diversified revenue streams. Companies like FIRST CAPITAL INC must navigate challenges such as rising operating costs and digital transformation demands while competing for assets under management or lending opportunities.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Revenue | $7.1M | $7.0M | $7.1M |
| Cost of Revenue | $0 | $0 | $0 |
| Gross Profit | $7.1M | $7.0M | $7.1M |
| Operating Expenses | $-7.1M | $-8.0M | $-7.1M |
| Operating Income | $14.2M | $15.1M | $14.2M |
| Stock-Based Comp | $436.0K | $252.0K | $202.0K |
| D&A | $1.1M | $1.0M | $1.1M |
| Depreciation | $924.0K | $882.0K | $951.0K |
| Amortization | — | $147.0K | $147.0K |
| Non-Operating Income | $-10.9M | $-12.1M | $-11.9M |
| Interest Expense | $1.6M | $9.0M | — |
| Pre-Tax Income | $3.3M | $3.0M | $2.3M |
| Income Tax | $2.3M | $2.2M | $2.2M |
| Continuing Ops | $1.0M | $724.0K | $39.0K |
| Discontinued Ops | $10.9M | $12.1M | $11.9M |
| Net Income | $11.9M | $12.8M | $12.0M |
| Minority Interest | $13.0K | $13.0K | $13.0K |
| Net to Common | $11.9M | $12.8M | $11.9M |
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| PP&E (Net) | $14.7M | $14.4M | $14.2M |
| Goodwill | $6.5M | $6.5M | $6.5M |
| Total Assets | $1.15B | $1.16B | $1.19B |
| Total Liabilities | $1.07B | $1.05B | $1.07B |
| Shareholders' Equity | $85.3M | $105.3M | $114.7M |
| Paid-In Capital | $41.6M | $41.6M | $41.7M |
| Retained Earnings | $88.5M | $97.1M | $105.3M |
| AOCI | $-35.7M | $-24.0M | $-23.0M |
| Treasury Stock | $8.7M | — | $9.3M |
| Total L&E | $1.15B | $1.16B | $1.19B |
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Net Income (CFO) | $11.9M | $12.8M | $12.0M |
| Non-Cash Adjustments | $-22.2M | $30.5M | $-27.8M |
| Working Capital Changes | $26.8M | $-29.1M | $38.2M |
| Cash from Operations | $16.5M | $14.2M | $22.3M |
| Capital Expenditures | $415.0K | $627.0K | $717.0K |
| Cash from Investing | $-144.0M | $-23.9M | $29.0M |
| Share Buybacks | $0 | $502.0K | $41.0K |
| Dividends Paid | $3.5M | $3.6M | $3.8M |
| Cash from Financing | $21.3M | $-17.8M | $15.9M |
| FX Effect | $0 | $0 | $0 |
| Net Change in Cash | $-106.2M | $-27.6M | $67.2M |
| Beginning Cash | $172.5M | $66.3M | $38.7M |
| Ending Cash | $66.3M | $38.7M | $105.9M |
Frequently Asked Questions
How does FIRST CAPITAL INC make money?
Capital Markets and Trading (indicated by $61.7M in security purchases), Corporate Financing and Lending (supported by $15.9M financing cash flow), Wealth Management or Advisory Services (suggested by operating profit structure), and Asset Management (evidenced by the large asset base relative to revenue).
What are the main risks for FCAP?
High leverage ratio with total liabilities of $1.07B against $1.19B in assets creating sensitivity to interest rate fluctuations, limited revenue growth stagnation over the past three years suggesting market saturation or pricing pressure, and potential volatility from non-operating losses of -$11.9M impacting overall earnings stability.
What is FCAP's competitive advantage?
Strong balance sheet liquidity with ending cash of $105.9M providing operational flexibility, efficient cost management allowing operating expenses to be negative at -$7.1M indicating strong scale or accounting adjustments, and a diverse revenue mix that buffers against single-sector downturns.
Related Companies
Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.