Is it a good company at a reasonable price? The Stock Price is probably reasonable. Shareholders are well rewarded. However, I would choose personally not to buy this stock because it is a business model I do not like. I do have friends that invest in this stock and that is fine. Everyone needs to decide themselves what sort of company they want to have shares in
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 Long Term Debt has increased by 57%. The ratio of Long Term Debt/Market Cap is still good at 0.37, but this is because the stock price has also increased some 85%. Intangibles and Goodwill have both increased. Intangibles by 532% and Goodwill by 750%. The Intangible Goodwill/Market Cap Ratio is still fine at 0.12.
You cannot fail to notice the explosive growth of this stock. The stock price is up by 49% per year over the past 5 years and up by 42% per year over the past 10 years.
If you had invested in this company in December 2011, $1002.75 you would have bought 191 shares at $5.25 per share. In December 2021, after 10 years you would have received $1,663.61 in dividends. The stock would be worth $34,229.11. Your total return would have been $35,892.72.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $5.25 | $1,002.75 | 191 | 10 | $1,663.61 | $34,229.11 | $35,892.72 |
The dividend yields are moderate with dividend growth good. The current dividend yield is moderate (2% to 4% ranges) at 3.65%. The 5, 10 and historical dividend yields are also moderate at 2.07%, 2.12% and 2.17%. The dividend growth is good (15% or higher) at 38.61% per year over the past 5 years.
The Dividend Payout Ratios (DPR) are fine except for the DPR FCF. The DPR for EPS for 2021 is 17% with 5 year coverage at 20%. The DPR for Adjusted Earnings per Share (AEPS) for 2021 is 8% with 5 year coverage at 10%. The DPR for Cash Flow per Share for 2021 is $41% with 5 year coverage at 7%. The DPR for Free Cash Flow for 2021 is negative and cannot be calculated.
Debt Ratios need improving. The Long Term Debt/Market Cap Ratio for 2021 is 0.37. However, the stock price has fallen a lot this year and the current ratio is a lot higher at 0.66. What used to keep this ratio in line was the huge run up in the stock price. The Liquidity Ratio is low at 1.37 and I prefer this to be at 1.50 or higher. Adding cash flow does not help as it is negative. The Debt Ratio is also low at 1.44 and I prefer this to be at 1.50 or higher. The Leverage and Debt/Equity Ratios ratio are too high at 3.29 and 2.29. I prefer these to be below 3.00 and 2.00, respectively.
The Total Return per year is shown below for years of 5 to 26 to the end of 2021. 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. |
|---|---|---|---|---|---|
| 2016 | 5 | 38.61% | 51.27% | 49.00% | 2.26% |
| 2011 | 10 | 21.04% | 45.38% | 42.34% | 3.04% |
| 2006 | 15 | 17.37% | 18.12% | 17.00% | 1.12% |
| 2001 | 20 | 19.36% | 24.50% | 22.42% | 2.08% |
| 1996 | 25 | 7.09% | 6.75% | 0.34% | |
| 1995 | 26 | 9.24% | 8.87% | 0.37% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 8.74, 11.97 and 14.89. The corresponding 10 year ratios are 8.41, 11.42 and 14.70. The corresponding historical ratios are 9.38, 11.97 and 15.21. The current P/E Ratio is 9.89 based on a stock price of $99.86 and EPS for 2022 of $10.10. The current ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I also have Adjusted Earnings per Share (AEPS) values. The 5 year low, median, and high median Price/Adjusted Earnings per Share Ratios are 8.13, 10.79 and 14.00. The corresponding 10 year ratios are 8.10, 11.03 and 13.85. The current P/AEPS Ratio is 8.46 based on a stock price of $99.86 and AEPS estimate for 2022 of $11.80. The current ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $102.66. The 10 year low, median, and high median Price/Graham Price Ratios are 0.70, 0.92 and 1.25. The current P/GP Ratio is 0.97 based on a stock price of $99.86. The current ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median Price/Book Value per Share Ratio of 1.81. The current P/B Ratio is 2.15 based a Book Value of $751M, Book Value per Share of $46.38 and a stock price of $99.86. The current ratio is 19% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I also have estimate of the Book Value per Share for 2022. Here the P/B Ratio is 1.91 based on a Book Value per Share estimate for 2022 of $52.40, Book Value of $849M and a stock price of $99.86. This ratio is 5% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median Price/Cash Flow per Share Ratio that is negative and useable. However, I do have Cash Flow without Working Capital. That 10 year median ratio is 2.54. The current P/CF Ratio is 3.65 based on a stock price of $99.86, Cash Flow without WC for last 12 months $443M and Cash Flow per Share of $27.35. The current ratio is 44% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
However, this is a financial and analysts do not think that cash flow is important for financials. They often do not give estimates for Cash Flow per Share for financials, but in this case they do. They expect positive cash flows in 2022. The P/CF Ratio for 2022 is 5.61. This is a low ratio.
I get an historical median dividend yield of 2.17%. The current dividend yield is 3.65% based on dividends of $3.64 and a stock price of $99.86. The current ratio is 68% above the historical dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 2.12%. The current dividend yield is 3.65% based on dividends of $3.64 and a stock price of $99.86. The current ratio is 72% above the historical dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10 year median Price/Sales (Revenue) Ratio is 1.04. The current P/S Ratio is 1.63 based on a stock price of $99.86, Revenue estimate for 2022 of $994M, and Revenue per Share of $61.36. The current ratio is 57% 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 reasonable. The problem is that the dividend yield tests say that the stock price is cheap, but the P/S Ratio tests says it is expensive. Why the Dividend yield tests say cheap is because of the huge rise in dividends over the past 5 years. The last one was for 38%. You have to wonder if this is sustainable. See paragraphs below, but I would go with a reasonable price because the ratios are not high and in fact most are quite good ratios.
Revenue per Share is up by 14.4% and 12.4% per year over the past 5 and 10 years. However, EPS is up by 45.7% and 33.6% per year over the past 5 and 10 years. The AEPS is up by 34.4% and 29% per year over the past 5 and 10 year. Dividend increases are up by 38.6% and 21.1% per year over the past 5 and 10 year. The Stock Price is up by 49% and 42% per year over the past 5 and 10 years. The EPS, AESP, Dividends and Stock Price can only outstrip the Revenue for so long and then it has to stop. Although, I must admit, these things can go on longer than you might think. But, in the end it is Revenue growth that will cause earnings growth in the longer term.
On the other hand, the ratios are not high ones. The current P/E Ratio is 9.89 which is considered a good ratio and any P/E Ratio under 10.00 is considered good. The current P/GP Ratio is 0.97 and this is good as any ratio under 1.00 is good and up to 1.50 is still reasonable. The projected P/B Ratio is 1.91 and that is fairly good as analysts generally consider anything under 3.00 reasonable (and 1.50 good). The current P/S Ratio is 1.63 good for a Financial Services stock.
When I look at analysts’ recommendations, I find Strong Buy (4), Buy (4), Hold (1). The Consensus would be a Strong Buy. The 12 months stock price consensus is $204.22. This implies a total return of $108.15% with 104.51% from capital gains and 3.65% from dividends based on a stock price of $99.86.
When I looked at analysts’ recommendations last year, I found 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 based on a stock price of $150.46. What happened was a stock price move to $99.86 and a total loss of 31.88% with a capital loss of 33.63% and dividends of 1.75%. To put a different perspective on this, the stock price was $217.67 by September 2021, but the stock price has been travelling south since.
An analyst on Stock Chase says that the stock price is getting hit for no particular reason. Stock Chase gives this stock 4 stars out of 5. Money Sense Rates this stock a C. Christopher Liew on Motley Fool says that president and CEO, Jason Mullins, said, “The first quarter continued to highlight the growth potential of our business model.” Ambrose O'Callaghan on Motley Fool says he would look to snatch up in this choppy market. The company has a Press Release on the fourth quarter. The company has a press release on Newswire about the first quarter of 2022.
A Simply Wall Street report on Yahoo Finance talks about who owns shares in this company. Simply Wall Street gives 4 risk warnings of debt is not well covered by operating cash flow; high level of non-cash earnings; dividend of 3.71% is not well covered by earnings; and profit margins (26.8%) are lower than last year (46.7%).
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 segment. 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 Friday, June 17, 2022 around 5 pm. Tomorrow on my other blog I will write about having an Emergency Fund .... learn more on Thursday, June 16, 2022 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.
See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
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