I do not own this stock of Goeasy Ltd (TSX-GSY, OTC-EHMEF). In April of 2016 Investment Reporter said to seek stocks with growing dividends from The Investment Reporter Key stock buys. This is one stock that was named. However, I would still rather invest in companies that are not in the business of charging very high interest rates.
When I was updating my spreadsheet, I noticed that this stock is growing very quickly in regards to EPS, Dividends and Stock Price. The EPS is up by 39% and 30% per year over the past 5 and 10 years. The dividend growth for the past 5 years is 34% per year, and the stock price is up by 39% and 26% per year over the past 5 and 10 years. Revenue growth is not as high with Revenue per Share group up by 14% and 11% per year over the past 5 and 10 years. So, EPS is growing much faster than Revenue and this cannot continue indefinitely. Although, analysts expect higher rates of growth in revenue for 2021 and 2022. These rates are 27% in 2021 and 23% in 2022. Still not as fast as EPS.
The dividend yields are low with dividend growth good. The current dividend yield is low (less than 2%) at 1.81%. The 5, 10 and historical dividend yields are moderate (2% to 4% ranges) at 2.17%, 2.21% and 2.21%. The dividends have increased by 34% per year over the past 5 years. The last dividend increase was in 2021 and it was for 47%.
The Dividend Payout Ratios (DPR) good. The DPR for EPS for 2020 is 19% with 5 year coverage at 23%. The DPR for CFPS for 2020 is 7% with 5 year coverage at 6%. The DPR for Free Cash Flow for 2020 is 36%. The 5 year coverage cannot be calculated because FCF was negative until 2020 when it turned positive.
Debt Ratios are fine, but there is room for improvement. The Long Term Debt/Market Cap Ratio for 2020 is 0.48. The Liquidity Ratio for 2020 is 1.93 and is good. The Debt Ratio for 2020 is 1.42 and this is a bit low. The 5 year median Debt Ratio is also low at 1.42. The current Debt Ratio is better at 1.52. I prefer this to be 1.50 or higher. The Leverage and Debt/Equity Ratios for 2020 are 3.39 and 2.39. These are high and I prefer them to be below 3.00 and 2.00.
The Total Return per year is shown below for years of 5 to 25 to the end of 2020. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2015 | 5 | 33.60% | 40.94% | 38.52% | 2.41% |
| 2010 | 10 | 16.51% | 28.68% | 26.43% | 2.24% |
| 2005 | 15 | 15.96% | 14.13% | 12.83% | 1.29% |
| 2000 | 20 | 23.95% | 21.20% | 2.75% | |
| 1995 | 25 | 7.08% | 6.58% | 0.51% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 8.74, 11.97 and 14.51. The corresponding 10 year ratios are 8.41. 11.42 and 14.11. The corresponding historical ratios are 9.41, 12.67 and 16.28. The current P/E Ratio is 10.98 based on a stock price of $150.46 and EPS estimate for 2021 of $13.70. The current ratio is between the 10 year low and median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $106.63. The 10 year low, median, and high median Price/Graham Price Ratios are 0.64, 0.84 and 1.13. The current ratio is 1.41 based on a stock price of $150.46. The current ratio is above 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median Price/Book Value per Share Ratio of 1.61. The current P/B Ratio is 4.08 based on a stock price of $150.46, Book Value of $550.3M and a Book Value per Share of $36.88. The current ratio is 153% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median Price/Cash Flow per Share Ratio of 1.90. The current P/CF Ratio is 20.67 based on Cash Flow for the last 12 months of $109M, Cash Flow per Share of $7.28 and a stock price of $150.46. The current ratio is 990% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. The 10 year median ratio is very low at 1.90 and it is low because the company has had some years of negative cash flow. However, a P/CF Ratio of 20.67 is quite high.
I get an historical median dividend yield of 2.21%. The current dividend yield is 1.75% based on a stock price of $150.46 and dividends of $2.64. The current dividend is 21% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median dividend yield also of 2.21%. The current dividend yield is 1.75% based on a stock price of $150.46 and dividends of $2.64. The current dividend is 21% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
The 10 year median Price/Sales (Revenue) Ratio is 0.93. The current P/S Ratio is 2.71 based on Revenue estimate for 2021 of $828M, Revenue per Share of $55.50 and a stock price of $150.46. The current ratio is 192% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
Results of stock price testing is that the stock price is probably expensive. The dividend yield tests are showing this and it is confirmed by the P/S Ratio test. The only test that does not show this is a P/E Ratio test and this one can be unreliable. For this company, the EPS is growing much faster than the Revenue. Also, analysts expect EPS to grow 56% in 2021 and I sort of wonder at this.
Is it a good company at a reasonable price? This is a company that I would not be keen to invest in. It is basically doing Pay-Day Loans and I understand why these companies should be legal, but I rather invest in other places. Currently the stock price seems on the expensive side.
When I look at analysts’ recommendations, I find Strong Buy (2) and Buy (4). The consensus would be a Buy. The 12 month stock price consensus is $175.67. This implies a total return of 18.51% with 16.76% from capital gains and 1.75% from dividends
The last entry on Stock Chase says to wait and not jump in based on historical performance. Jed Lloren on Motley Fool is impress with this company. The executive summary on Simply Wall Street gives this stock 4 stars out of 5 and list 4 risks. A writer on Simply Wall Street is impressed with the earnings growth of this company. A writer on Simply Wall Street likes this stock as a dividend growth stock because of the conservative payout ratio, increasing EPS and increasing dividends.
Goeasy Ltd provides financial services to own furniture, electronics, computers, and appliances. It offers merchandise leasing of household furnishings, appliances, and home electronic products to consumers under weekly or monthly leasing agreements. The company also offers unsecured installment loans to consumers. Its reportable business segments include easyhome and easyfinancial, of which it derives maximum revenue from easyfinancial. Its web site is here Goeasy Ltd.
The last stock I wrote about was about was Algonquin Power & Utilities Corp (TSX-AQN, NTSE-AQN) ... learn more. The next stock I will write about will be Lassonde Industries Inc (TSX-LAS.A, OTC-LSDAF) ... learn more on Wednesday, June 16, 2021 around 5 pm. Tomorrow on my other blog I will write about Best Utility Buys.... learn more on Tuesday, June 15, 2021 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
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