$1,000 Invested in goeasy Stock a Decade Ago Is Worth This Much Today

goeasy stock has returned over 1,000% to shareholders in the last 10 years. Is GSY stock a good buy right now?

| More on:
data analyze research

Image source: Getty Images

goeasy (TSX:GSY) is a TSX stock that has provided shareholders with game-changing returns in the past decade. Since March 2014, goeasy stock has returned 820% to investors. After adjusting for dividends, total returns are much higher at 1,008%.

It means a $1,000 investment in goeasy stock a decade back would be worth close to $12,000 today. Comparatively, a similar investment in the TSX index would be worth just over $2,000.

As past returns shouldn’t matter much to current and future investors, let’s see if goeasy stock should be a part of your equity portfolio right now.

goeasy stock is down 24% from all-time highs

goeasy is one of Canada’s largest non-prime consumer lenders, valued at a market cap of $2.75 billion. In the last two years, rising interest rates have led to a tepid lending environment and higher delinquency rates, making investors nervous. Despite its market-thumping gains, goeasy stock is down 24% from all-time highs, allowing you to buy the dip.

In the fourth quarter (Q4) of 2023, goeasy’s loan originations totalled $705 million, up 12% year over year. goeasy attributed the increase in lending to record credit applications, which grew 29%. The company experienced strong performance across product and acquisition channels, which includes unsecured lending, point-of-sale lending and automotive financing.

The increase in loan originations meant goeasy’s loan portfolio rose by $215 million. Its consumer loan portfolio stood at $3.65 billion, up 30% year over year. The growth in consumer loans drove top line growth for goeasy as sales in Q4 rose 24% to $338 million.

Despite an uncertain macro environment and higher lending rates, goeasy experienced stable credit performance. Its net charge-off rate in Q4 stood at 8.8%, down from 9% in the year-ago period. A stable credit performance reflects improved credit and product mix in the loan portfolio and underwriting enhancements. Moreover, goeasy’s allowance for future credit losses reduced to 7.28% in Q4 compared to 7.37% in Q3.

goeasy’s widening dividends

goeasy reported an operating income of $137 million in Q4, up 81% year over year, as operating margins improved from 27.8% to 40.6% in the last 12 months. After adjusting for non-recurring items, operating income grew 41% to $141 million in Q4. Its free cash flow also improved by 29% to $85 million in the December quarter.

A widening bottom line allows goeasy to pay shareholders an annual dividend of $4.68 per share, indicating a forward yield of 2.8%. In the last 10 years, goeasy has increased dividends by 25% annually, enhancing the effective yield significantly.

  • We just revealed five stocks as “best buys” this month … join Stock Advisor Canada to find out if Enbridge made the list!

goeasy’s free cash flow stood at $85 million, up 29% from the year-ago quarter. Comparatively, it paid dividends worth less than $20 million, indicating a payout ratio of less than 25%, providing goeasy with enough room to reinvest in growth projects and acquisitions.

What’s next for GSY stock?

Based on its balance sheet cash and revolving credit facilities, goeasy ended 2023 with $901 million in total funding capacity. It can grow the consumer loan portfolio by $250 million each year from internal cash flows, driving future earnings higher.

Priced at less than 10 times forward earnings, goeasy stock is quite cheap and trades at a discount of 23% to consensus price target estimates.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Dividend Stocks

hand using ATM
Dividend Stocks

Should Bank of Nova Scotia or Enbridge Stock Be on Your Buy List Today?

These TSX dividend stocks trade way below their 2022 highs. Is one now undervalued?

Read more »

A meter measures energy use.
Dividend Stocks

Here’s Why Canadian Utilities Is a No-Brainer Dividend Stock

Canadian Utilities stock is down 23% in the last year. Even if it wasn’t down, it is a dividend stock…

Read more »

edit Business accounting concept, Business man using calculator with computer laptop, budget and loan paper in office.
Dividend Stocks

Got $5,000? Buy and Hold These 3 Value Stocks for Years

These essential and valuable value stocks are the perfect addition to any portfolio, especially if you have $5,000 you want…

Read more »

Growing plant shoots on coins
Dividend Stocks

3 Magnificent Ultra-High-Yield Dividend Stocks That Are Screaming Buys in April

High yield stocks like BCE (TSX:BCE) can add a lot of income to your portfolio.

Read more »

grow money, wealth build
Dividend Stocks

1 Growth Stock Down 24% to Buy Right Now

With this impressive growth stock trading more than 20% off its high, it's the perfect stock to buy right now…

Read more »

Dividend Stocks

What Should Investors Watch in Aecon Stock’s Earnings Report?

Aecon (TSX:ARE) stock has earnings coming out this week, and after disappointing fourth-quarter results, this is what investors should watch.

Read more »

Freight Train
Dividend Stocks

CNR Stock: Can the Top Stock Keep it Up?

CNR (TSX:CNR) stock has had a pretty crazy last few years, but after a strong fourth quarter, can the top…

Read more »

Hand arranging wood block stacking as step stair with arrow up.
Dividend Stocks

3 Stocks Ready for Dividend Hikes in 2024

These top TSX dividend stocks should boost their distributions this year.

Read more »