Growth stocks don’t always have to be new, flashy companies. Just take goeasy (TSX:GSY) as an example. This Canadian financial services company has been around for decades but continues to deliver impressive growth. Over the past five years, goeasy’s stock price surged by over 350%, proving that established companies can still generate substantial returns for investors. So, while newer companies may grab headlines, seasoned businesses like goeasy stock show that long-term growth doesn’t always come with youth! So, let’s get into why it’s still a great buy.
Source: Getty Images
About goeasy stock
goeasy is a Canadian company that has become a key player in the non-prime financial services industry, offering personal loans and other credit products to individuals who may not qualify for traditional bank financing. Established in 1990, goeasy operates through its two primary divisions: easyfinancial, which provides personal loans and lending solutions, and easyhome, which offers furniture, electronics, and appliance leasing. Over the years, goeasy has expanded its services to include home equity loans, point-of-sale financing, and auto loans, positioning itself as a one-stop shop for non-prime borrowers.
The company is known for its commitment to serving everyday Canadians who need access to credit. Particularly those with non-prime credit scores. This customer-focused approach has helped goeasy stock build a reputation for providing accessible, responsible financial solutions. goeasy stock has also embraced digital innovation. Thus making it easier for customers to apply for loans and manage their accounts online.
Record earnings
goeasy stock has continued its strong earnings momentum into 2024, with record second-quarter (Q2) results that highlight robust growth across its financial services. The company generated $827 million in loan originations, a 24% year-over-year increase. Plus, it has experienced a significant 29% growth in its loan portfolio, now valued at $4.14 billion. This impressive performance led to record revenues of $378 million, up 25% from the same quarter in 2023, thereby reflecting the company’s ability to attract new customers and expand its lending services.
In terms of profitability, goeasy’s adjusted diluted earnings per share reached $4.10, up 25%. Meanwhile, net income rose 18% year over year to $65.4 million. The company also saw an increase in its operating income, up 33%, and an improvement in its efficiency ratio to 26.9%. With goeasy stock serving over 48,000 new customers in the quarter and securing additional funding to support future growth, the company remains well-positioned to maintain its upward trajectory. As Chief Executive Officer Jason Mullins put it, “We’re proud to serve everyday Canadians with access to credit, driving record loan growth and revised upward forecasts.”
Long-term value
Despite goeasy’s stock being down from its 52-week high of $206.02, it remains a valuable pick for investors. With a market cap of $3 billion and a forward price-to-earnings (P/E) ratio of 8.78, goeasy stock offers a good balance between growth potential and value. The company boasts strong profitability metrics, including a profit margin of 33.4% and a solid return on equity (ROE) of 25.28%, thus reflecting its ability to generate healthy returns for shareholders. The company’s dividend yield of 2.62% also makes it attractive for income-seeking investors. Plus, its payout ratio of 27.7% leaves room for future dividend increases.
goeasy stock’s fundamentals further bolster its value. It has a 52-week change of 55.43%, which signals strong growth momentum even after its recent pullback. With $225.88 million in cash, the company has a strong liquidity position, which can help weather any short-term volatility. For investors looking at long-term growth, goeasy’s steady loan portfolio growth and expanding market share in non-prime lending reinforce its potential.
Bottom line
For Canadian investors, goeasy stock presents a strong case as a valuable investment, especially with its stock currently trading below its 52-week high of $206.02. Despite the dip, goeasy’s fundamentals remain solid, showcasing 17.7% earnings growth year over year and a profit margin of 33.4%, indicating its strong financial health. The company’s focus on secured loans and consistent dividend payouts, with a yield of 2.62%, make it a compelling pick for long-term growth and income. With a low forward P/E of 8.78, goeasy stock continues to offer solid value for investors looking to capitalize on its long-term potential.
