Is it a good company at a reasonable price? Personally, I would not buy this stock as I do not like Pay Loan type businesses. It may be the only way for some to buy things that they want, but it is not the sort of business I want to invest in. The company does have good growth, but I would worry about the debt and debt ratios. The stock price is probably reasonable.
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 company has great growth. I worry about the Debt/Market Cap Ratio is high at 1.27 for 2022 and is presently at 1.32. That means that their debt is higher than the Market Cap. This ratio is bad at 1.00 and above and is better at 0.50. They do not separate out current and long term debt, but it is not that hard to see the debt among the liabilities.
The other thing that has worried me and have stopped me from investing in this company is they have a reputation of very high interest rates. This is not how I want to invest.
If you had invested in this company in December 2012, for $1,001.22 you would have bought 111 shares at $9.02 per share. In December 2022, after 10 years you would have received $1,303.14 in dividends. The stock would be worth $11,815.95. Your total return would have been $13,119.09.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $9.02 | $1,001.22 | 111 | 10 | $1,303.14 | $11,815.95 | $13,119.09 |
They do have some good growth as you can see from the chart below. I included Cash Flow Growth excluding Working Capital as this is another way of looking at Cash Flow. I published notes on this here. See also. See Investopedia. So, there are reasons to look at the Cash Flow excluding the Working Capital.
| Year | Item | Tot. Growth | Per Year |
|---|---|---|---|
| 5 | Revenue Growth | 151.55% | 20.26% |
| 5 | AEPS Growth | 288.89% | 31.21% |
| 5 | Net Income Growth | 287.91% | 31.14% |
| 5 | Cash Flow Growth | 0.00% | 0.00% |
| 5 | CF Growth Excl. WC | 235.71% | 27.41% |
| 5 | Dividend Growth | 409.77% | 38.51% |
| 5 | Stock Price Growth | 186.54% | 23.43% |
| 10 | Revenue Growth | 410.50% | 17.71% |
| 10 | AEPS Growth | 1227.59% | 29.51% |
| 10 | Net Income Growth | 1167.62% | 28.91% |
| 10 | Cash Flow Growth | 0.00% | 0.00% |
| 10 | CF Growth Excl. WC | 684.70% | 22.88% |
| 10 | Dividend Growth | 841.67% | 25.14% |
| 10 | Stock Price Growth | 1080.16% | 28.00% |
The current dividend yield is moderate with dividend growth good. The current dividend yield is moderate (2% to 4% ranges) at 3.48%. The 5, 10 and historical median dividend yields are also moderate at 2.07%, 2.12% and 2.21. The current dividend growth is 38.5% per year over the past 5 years. The last dividend increase was for 5.5% and it occurred in 2023.
The Dividend Payout Ratios (DPR) are fine. The DPR for Earnings per Share (EPS) for 2022 is 40% with 5 year coverage at 20%. The DPR for 2022 for Adjusted Earnings per Share (AEPS) is 29% with 5 year coverage at 24%. The DPR for 2022 for Cash Flow per Share (CFPS) is 10% with 5 year coverage at 8%. The DPR for Free Cash Flow is negative. However, there are disagreements between site on what the FCF is.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 40.26% | 20.09% |
| AEPS | 29.35% | 24.19% |
| CFPS | 10.14% | 7.96% |
| FCF | -3.12% | -7.86% |
Some Debt Ratios are awful. The Long Term Debt/Market Cap Ratio for 2022 is too high at 1.27. It is even higher currently at 1.30. If over 1.00, it means that the Long Term Debt is higher than the Market Cap (Shares times stock price). The stock price has come down, but debt has also gone up. Debt increased 72% in 2021 and 40% in 2022.
The Liquidity Ratio is fine at 1.46 for 2022. The Debt Ratio is low for 2022 at 1.36, I prefer it to be at 1.50 or above for safety’s sake. The Leverage and Debt/Equity Ratios for 2022 are too high at 3.80 and 2.80. I prefer them to be below 3.00 and below 2.00.
| Type | Ratio '22 | Ratio Curr |
|---|---|---|
| Lg Term R | 1.27 | 1.30 |
| Intang/GW | 0.18 | 0.17 |
| Liquidity | 1.46 | 1.68 |
| Liq. + CF | 0.79 | 1.94 |
| Debt Ratio | 1.36 | 1.35 |
| Leverage | 3.80 | 3.87 |
| D/E Ratio | 2.80 | 2.87 |
The Total Return per year is shown below for years of 5 to 27 to the end of 2022. 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. |
|---|---|---|---|---|---|
| 2017 | 5 | 38.51% | 26.45% | 23.43% | 3.01% |
| 2012 | 10 | 25.14% | 31.16% | 28.00% | 3.17% |
| 2007 | 15 | 18.37% | 13.46% | 11.89% | 1.58% |
| 2002 | 20 | 20.40% | 20.09% | 17.31% | 2.77% |
| 1997 | 25 | 8.63% | 7.88% | 0.75% | |
| 1995 | 27 | 7.09% | 6.45% | 0.64% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 8.74, 11.97 and 15.21. The corresponding 10 year ratios are 8.80, 11.76 and 14.97. The corresponding historical ratios are 9.41, 12.67 and 16.28. The current P/E Ratio is 8.42 based on a stock price of $110.33 and EPS estimate for 2023 of $13.10. The current ratio is below the low ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 8.34, 11.95 and 15.21. The corresponding 10 year ratios are 8.23, 11.42 and 14.52. The current P/AEPS Ratio is 8.09 based on a stock price of $110.33 and AEPS for 2023 of $13.64. The current ratio is below the low ratio of the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $129.40. The 10-year low, median, and high median Price/Graham Price Ratios are 0.74, 0.98 and 1.36. The current P/GP Ratio is 0.85 based on a stock price of $110.33. The current ratio is between the low and median ratio 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 1.94. The current P/B Ratio is 2.02 based on a stock price of $110.33, Book Value of $902M and Book Value per Share of $54.56. The current P/B Ratio is 4% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I also have a Book Value per Share estimate for 2023 of $62.60. This implies a P/B Ratio of 1.77, Book Value of $1,028M with a stock price of $110.33. This ratio is 9% below 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 of negative 3.70. Negative values are not good for doing stock price testing. The current P/CF Ratio is 5.08 based on Cash Flow per Share estimate for 2023 of $21.70 and a stock price of $110.33. This is a low values and points to a cheap price.
I get an historical median dividend yield of 2.21%. The current dividend yield is 3.48% based on dividends of $3.84 and a stock price of $110.33. The current yield is 57% above the historical median dividend yield. This stock price testing suggests that the stock price is cheap.
I get a 10 year median dividend yield of 2.12%. The current dividend yield is 3.48% based on dividends of $3.84 and a stock price of $110.33. The current yield is 64% above the historical median dividend yield. This stock price testing suggests that the stock price is cheap.
The 10-year median Price/Sales (Revenue) Ratio is 1.13. The current P/S Ratio is 1.47 based on Revenue estimates for 2023 of $1,239M, Revenue per Share of $74.94 and a stock price of $110.33. The current ratio is 30% 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 dividend yield tests say that the stock price is cheap, but it is not confirmed by the P/S Ratio test which says the stock price is expensive. So, a reasonable price strikes a balance. Also, all the other tests say the stock price is cheap or reasonable.
When I look at analysts’ recommendations, I find Strong Buy (3), Buy (6) and Hold (1). The consensus would be a Strong Buy. The 12 months stock price consensus is $162.10. This implies a total return of 50.40% with 46.92% from capital gains and 3.48% from dividends.
The recommendations from analysts on Stock Chase range from Do Not Buy to Buy. The Do Not Buy range from Government Rules to Risky Loans. Stock Chase gives this stock 4 stars out of 5. Goeasy is on the Money Sense list ranked 22. It is also on the Aristocrats List. Adam Othman on Motley Fool thinks this is a value stock you should not ignore. Sneha Nahata on Motley Fool thinks this is a stock to buy now for massive returns over the next decade. The company put out a Press Release on Newswire about their fourth quarter of 2022 results. The company put out a Press Release on Newswire about their first quarter of 2023.
Simply Wall Street on Yahoo Finance reviews this stock. They give 4 warnings of debt is not well covered by operating cash flow; high level of non-cash earnings; dividend of 3.48% is not well covered; and shareholders have been diluted in the past year. Simply Wall Street gives this stock 3 stars out of 5.
Goeasy Ltd provides financial services company. The principal operating activities of the Company include: providing loans and other financial services to consumers and leasing household products to consumers. The Company operates in two reportable segments: easyfinancial and easyhome. The key revenue of the company is generated 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 Friday, June 16, 2023 around 5 pm. Tomorrow on my other blog I will write about TD Bank.... learn more on Thursday, June 15, 2023 around 5 pm.
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