Canadian financial services company goeasy (TSX:GSY) provides loans and leasing services to subprime borrowers. What stands out is that goeasy stock has experienced significant growth over the past decade, reflecting the strength of the company’s business model and its efforts to expand the business.
Notably, this Canadian stock has gained nearly 1,126% in the past decade, reflecting a compound annual growth rate (CAGR) of 28.5%. Its returns have been even better in recent years. For instance, goeasy stock has increased at a CAGR of 33.7% in the last five years, delivering an overall capital appreciation of 327.5%.
While it created wealth for its shareholders, goeasy has solidified its position as a prominent player in the alternative financial services domain. Further, its business demonstrated resilience during economic downturns, showcasing its ability to manage credit risk effectively.
With this backdrop, let’s zoom in on three things about goeasy stock that every smart investor knows or needs to know.
goeasy is one of the top Canadian growth stocks
goeasy is a compelling choice for investors planning to invest in growth stocks. Thanks to its leading position in the non-prime lending market, the company sees solid loan demand, which drives its overall consumer loan portfolio and top line. Further, its prudent risk-management practices and focus on customer creditworthiness lead to the stable performance of its loans, which augurs well for bottom-line growth.
Investors should note that goeasy’s revenue and adjusted earnings per share (EPS) have grown at a CAGR of 17.7% and 29.5% between 2012 and 2022. In recent years, goeasy’s growth rate has accelerated further. For instance, over the past five years (ending December 31, 2023), goeasy’s revenue has risen at a CAGR of 19.8%. Meanwhile, its EPS grew at a CAGR of 31.9%.
The large subprime lending market, omnichannel offerings, diversified funding sources, and geographical expansion will likely lead to double-digit growth in goeasy’s top line. Meanwhile, leverage from higher sales, stable credit performance, and improving efficiency will drive its earnings and support its shares.
goeasy is a Dividend Aristocrat
Thanks to its solid fundamentals and growing earnings base, goeasy has consistently increased its dividend. In February 2020, goeasy was added to the S&P/TSX Canadian Dividend Aristocrat Index.
Notably, goeasy has been paying dividends for 20 consecutive years. Further, it increased its dividend for 10 consecutive years.
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In summary, goeasy’s solid top and bottom-line growth and commitment to return cash to its shareholders make it an attractive stock for income investors. goeasy stock currently offers a yield of 2.8% based on its closing price of $170 on April 12.
goeasy’s valuation remains attractive
goeasy stock is up about 82.5% in one year. Despite this notable increase, goeasy is trading at the next 12-month price-to-earnings multiple of 10.1. It appears attractive, considering its strong double-digit earnings-growth rate and decent dividend yield. Moreover, its forward valuation multiple is lower than the historical average.
Bottom line
goeasy’s impressive revenue and earnings growth and commitment to returning higher cash to shareholders position it as a compelling choice for investors seeking growth and income. Also, its valuation appears favourable, providing a solid buying opportunity near the current price levels.
