Is it a good company at a reasonable price? It has done well for its shareholders in the past. I do not like their level of debt. I would not invest in this company because it is not the sort of company I like because it charges very high interest rates, but I can see the logic of allowing such companies because the alternative can be worse.
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 they have a lot of debt and this debt is often higher than the Market Value of this stock. Also, they never seem to have a positive cash flow, but they have a very positive Net Income and EPS. I also noticed there is a difference between the stock price in the US and Canada. In the US the stock price is $131.73 which is 3% lower than the Canadian price of $185.89 with current exchange of 1.3700. Of course, there is not much trading in the US.
The main reason why this stock shows as expensive in the P/S Ratio test is that the Revenue is growing slower than the stock price over the past 5 and 10 years. See chart below.
| Yr | Item | Tot. Gwth | Per Year | Gwth | Coverage |
|---|---|---|---|---|---|
| 5 | Revenue Growth | 146.96% | 19.82% | 5.59% | <-12 mths |
| 5 | AEPS Growth | 299.16% | 31.90% | 5.14% | <-12 mths |
| 5 | Net Income Growth | 366.64% | 36.08% | 3.03% | <-12 mths |
| 5 | Cash Flow Growth | 0.00% | 0.00% | -3.35% | <-12 mths |
| 5 | CF Growth Excl. WC | 193.16% | 24.00% | 6.13% | <-12 mths |
| 5 | Dividend Growth | 343.27% | 34.69% | 17.94% | <-12 mths |
| 5 | Stock Price Growth | 341.88% | 34.60% | 17.61% | <-12 mths |
| 10 | Revenue Growth | 471.29% | 19.04% | 21.27% | <-this year |
| 10 | AEPS Growth | 1135.65% | 28.58% | 19.85% | <-this year |
| 10 | Net Income Growth | 1647.98% | 33.12% | 13.27% | <-this year |
| 10 | Cash Flow Growth | 0.00% | 0.00% | -3.35% | <-this year |
| 10 | CF Growth Excl. WC | 715.53% | 23.35% | ||
| 10 | Dividend Growth | 952.78% | 26.54% | 22.69% | <-this year |
| 10 | Stock Price Growth | 813.64% | 24.76% | 17.61% | <-this year |
If you had invested in this company in December 2013, for $1,003.40 you would have bought 58 shares at $17.30 per share. In December 2023, after 10 years you would have received $879.86 in dividends. The stock would be worth $9,167.48. Your total return would have been $10,047.34. This would be a total return of 27.11% per year with 24.76% from capital gain and 2.35% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $17.30 | $1,003.40 | 58 | 10 | $879.86 | $9,167.48 | $10,047.34 |
The current dividend yield is moderate with dividend growth good. The dividend is moderate (2% to 4% range) at 2.52%. The 5, 10 and historical median dividend yields are also moderate at 2.46%, 2.12%, and 2.25%. The dividends were increased by 34.69% per year over the past 5 years. The last dividend increase was in 2024 and it was for 21.9%.
The Dividend Payout Ratios (DPR) are good, but cash flow is lacking. The DPR for 2023 for Earnings per Share (EPS) is good at 26% with 5 year coverage at 24%. The DPR for 2023 for Adjusted Earnings per Share (AEPS) is good at 27% with 5 year coverage at 25%. The DPR for 2023 for Cash Flow per Share excluding (CFPS) is negative. The DPR for 2023 for Cash Flow per Share excluding WC (CFPS) is good at 9% with 5 year coverage at 7%. The DPR for 2023 for Free Cash Flow (FCF) is negative.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 26.17% | 24.01% |
| AEPS | 26.67% | 24.72% |
| CFPS | -13.31% | -17.77% |
| CFPS WC | 9.33% | 8.64% |
| FCF | -3.39% | -6.62% |
Debt Ratios show that the debt is far too high. The Long Term Debt/Market Cap Ratio for 2023 is far too high at 1.07 and currently marginally better at 0.99. The Liquidity Ratio for 2023 is good at 1.63 and 3.35 currently. If you added in Cash Flow after dividends, the ratios are rather lower at 1.05 and currently at 1.64. The Debt Ratio for 2023 is lower than what I like at 1.34 and 1.33 currently. I prefer these ratios to be 1.50 or better. The Leverage and Debt/Equity Ratios for 2023 are far too high at 3.95 and 2.95 and currently at 4.00 and 3.00. I prefer these to be below 3.00 and below 2.00.
| Type | Ratio '22 | Ratio Curr |
|---|---|---|
| Lg Term R | 1.07 | 0.99 |
| Intang/GW | 0.12 | 0.10 |
| Liquidity | 1.63 | 3.35 |
| Liq. + CF | 1.05 | 1.64 |
| Debt Ratio | 1.34 | 1.33 |
| Leverage | 3.95 | 4.00 |
| D/E Ratio | 2.95 | 3.00 |
The Total Return per year is shown below for years of 5 to 28 to the end of 2023. 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. |
|---|---|---|---|---|---|
| 2018 | 5 | 34.69% | 38.11% | 34.60% | 3.51% |
| 2013 | 10 | 26.54% | 27.11% | 24.76% | 2.35% |
| 2008 | 15 | 17.44% | 22.87% | 20.62% | 2.25% |
| 2003 | 20 | 19.93% | 20.46% | 17.94% | 2.52% |
| 1998 | 25 | 13.39% | 12.53% | 0.86% | |
| 1995 | 28 | 8.27% | 7.73% | 0.55% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 6.39, 10.64 and 14.89. The corresponding 10 year ratios are 8.80, 11.63 and 14.70. The corresponding historical ratios are 9.38, 11.97 and 15.21. The current P/E Ratio is 11.43 based on a stock price of $185.89 and EPS estimate for 2024 of $16.26. 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 also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 7.57, 10.79 and 14.00. The corresponding 10 year ratios are 8.23, 11.03 and 13.85. The current P/AEPS Ratio is 10.92 based on a stock price of $185.89 and AEPS estimate for 2027 of $17.03. 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 Graham Price of $159.46. 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 1.17 based on a stock price of $185.89. The current ratio is between the median and high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10-year median Price/Book Value per Share Ratio of 2.02. The current P/B Ratio is 2.80 based on a stock price of $185.89, Book Value of $1,103M, and Book Value per Share of $66.36. The current ratio is 39% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I also have a Book Value per Share estimate for 2024 of $75.90. This analyst calculates the Book Value differently than I do and the 10 year median ratio in this case is 1.84. With the BVPS of $75.90, this implies a ratio of 2.45 with a Book Value of $1,262M and a stock price of $185.89. This ratio is 21% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I cannot do a 10-year median Price/Cash Flow per Share Ratio test because this company has had negative cash flows.
I get an historical median dividend yield of 2.25%. The current dividend yield is 2.52% based on a stock price of $185.89 and Dividends of $4.68. The current ratio is 12% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median dividend yield of 2.12%. The current dividend yield is 2.52% based on a stock price of $185.89 and Dividends of $4.68. The current ratio is 19% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
The 10-year median Price/Sales (Revenue) Ratio is 1.26. The current P/S Ratio is 2.04 based on Revenue estimate for 2024 of $1,516M, Revenue per Share of $91.19 and a stock price of $185.89. The current ratio is 61% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. The problem here is that the stock price is rising faster than Revenue.
Results of stock price testing is that the stock price is that the stock price maybe reasonable. The dividend yield tests are showing the stock price as reasonable. However, it is not confirmed by the P/S Ratio test which is showing the stock price as expensive. Most of the rest of the testing is showing the stock price as reasonable, except for the P/B Ratio test. Also, it is a problem that the cash flow is negative.
When I look at analysts’ recommendations, I find Strong Buy (2), Buy (5) and Hold (1). The consensus would be a Buy. The 12 months stock price consensus is $225.40, with a high of $300.00 and a low of $200.00. The consensus stock price of $225.40 implies a total return of 23.77% with 21.25% from capital gains and 2.52% from dividends based on a current stock price of $185.89.
Analysts on Stock Chase have positive views on this company. Some think it is a buy and some do not. Stock Chase gives this company 5 stars out of 5. Aditya Raghunath on Motley Fool thinks this stock is trading at a compelling valuation. Rajiv Nanjapla on Motley Fool thinks this company is an attractive buy. The company put out a press release via Newswire about their fourth quarter of 2023. The company put out a press release via Newswire about their first quarter of 2024 results.
Simply Wall Street via Yahoo Finance says this is top growth company with high insider ownership. Simply Wall Street fives this stock 3 and one half stars out of 5. They have 3 warnings of high level of non-cash earnings; debt is not well covered by operating cash flow; dividend of 2.52% is not well covered by cash flows.
Goeasy Ltd is a financial services company. The Company operates in two reportable segments: Easyfinancial and Easyhome. The Easyfinancial reportable segment lends out capital in the form of unsecured and secured consumer loans to nonprime borrowers. Easyfinancial's product offering consists of unsecured and real estate-secured installment loans. 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 Monday, June 17, 2024 around 5 pm.
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