goeasy (TSX:GSY) has been a clear winner over the last few years. The stock has seen an increase in share price since the pandemic hit. And even after falling slightly in the post-pandemic downfall, the company has managed to make a wild comeback.
And that, in part, comes down to strong earnings. goeasy stock continues to climb higher and higher, with earnings coming in stronger and stronger. But can it keep it up? Here’s what investors should look for before picking up goeasy stock ahead of earnings on May 7.
About goeasy stock
If you’ve seen goeasy stock for years now but still don’t have an idea of what it does, let’s go over it quickly. This should help investors understand why it’s been doing so well. goeasy stock is a Canadian-based financial services company primarily focused on providing financial solutions to non-prime consumers, meaning individuals who have limited access to traditional banking and credit services due to factors such as low credit scores or limited credit history.
goeasy stock has grown significantly since its inception and operates through two main segments: easyfinancial, which focuses on providing personal loans and other financial services, and easyhome, which offers lease-to-own products for household goods.
This growth has only continued, whether interest rates are high or low. During low-rate environments, the company sees growth from those looking to take out loans and purchase items. In higher-rate environments, they want the best option. So, let’s now turn our attention to what investors should watch with earnings around the corner.
What to watch
When it comes to goeasy stock, there are a few metrics that investors will want to keep an eye on to make sure the stock is continuing to beat estimates and grow. First up, earnings per share (EPS) and revenue are generally important metrics for any company, but for goeasy, they’re crucial because they directly reflect its ability to generate profit from loan interest. Investors will want to see goeasy stock efficiently convert loan volume into earnings.
Even more critical for goeasy stock compared to some other companies is profit margin. Since goeasy operates in a competitive lending space with potentially tight margins, even small increases in profit margin can significantly impact their bottom line.
Perhaps one of the most important metrics is loan growth. As a loan provider, this is the lifeblood of goeasy’s business. Steady or increasing loan growth indicates strong demand for its services and the ability to attract new customers. Conversely, stagnant or declining loan growth could raise concerns about goeasy’s competitiveness or the overall loan market.
Guidance
From there, investors will want to look to the future — especially as the federal government recently held the annual percentage rate (APR) at 35% for companies like goeasy stock. The stock has since come out stating it could reach as low as 29.5% by 2026, keeping it well within those new regulations.
Yet, given the potential for economic fluctuations to impact loan demand, goeasy stock’s management insights on future loan growth and overall business outlook are particularly valuable for investors to assess potential risks and opportunities. Economic factors like rising interest rates can directly affect customer borrowing habits and loan repayment timelines. Understanding how management is navigating these external factors is crucial for investors.
All in all, goeasy stock has managed to prove the company can weather each and every storm. But the question will be whether it can keep it up. Investors will see more of this demonstrated in its next earnings report.
