Goeasy (TSX:GSY) is a popular stock among investors looking for growth opportunities in the financial sector. But with its stock recently dipping below $170, many are wondering whether it’s time to buy or hold off. Let’s break down the latest earnings, performance, and future outlook to help you make an informed decision.
Into earnings
As of the most recent quarter, goeasy reported impressive earnings. The company generated trailing 12-month (TTM) revenue of $803.9 million, with 5.1% year-over-year revenue growth. Earnings per share (EPS) stood at $16.39, reflecting solid 28.1% year-over-year earnings growth. The strong profitability can be seen in a 35.3% profit margin and a remarkable 48.8% operating margin. Despite the robust numbers, the stock’s price pulled back to the $167 range. This could be attributed to market-wide trends or broader sector volatility.
Over the past year, goeasy has faced its share of fluctuations,. Yet now might be an attractive buy for those looking for a deal. The company has historically performed well, managing to grow revenues and earnings steadily. Even when market conditions were less favourable. With a price-to-earnings (P/E) ratio of 10.2, goeasy stock is attractive compared to its peers, especially considering its strong growth prospects.
Looking ahead, goeasy’s outlook remains positive. The company operates in the consumer finance space, with a focus on offering loans and credit services to underserved customers. The financial services market should continue expanding, with goeasy stock well-positioned to capitalize on this trend. Analysts believe that goeasy’s low valuation relative to its growth could offer a compelling long-term investment opportunity.
Considerations
While goeasy stock is primarily known for its growth potential, it also provides an appealing dividend for income-seeking investors. The current dividend yield is 2.8%, with a payout ratio of 27.3%. This suggests the dividend is sustainable. It also makes it an attractive option for dividend investors who are looking to supplement their income while also benefiting from the company’s growth.
While goeasy’s fundamentals are strong, it’s important to recognize the risks involved. The company carries a significant amount of debt, with a total debt-to-equity ratio of 292.6%. This high debt level could become problematic if interest rates rise or if there are broader economic slowdowns. However, the company’s strong cash flow and profitability should help it navigate these challenges, provided it continues to perform well.
So why is it down? The recent drop in goeasy stock’s price can be attributed to broader market conditions. With interest rate hikes and economic uncertainty, stocks like goeasy, which are sensitive to consumer credit and debt levels, can experience volatility. This may present an opportunity for long-term investors who are willing to ride out short-term fluctuations for the sake of future growth.
Foolish takeaway
With goeasy stock under $170, now might be the time to buy if you’re looking for a stock with solid growth potential and a sustainable dividend yield. While risks exist, particularly with its high debt, goeasy has proven itself capable of managing those challenges. For investors with a higher risk tolerance and long-term focus, goeasy could be an excellent addition to a diversified portfolio.
If you’re in the market for a growth stock with a side of income, goeasy could be the right choice. However, if you’re more risk-averse, it might be worth considering other dividend-focused stocks or waiting for a further dip in price. Either way, goeasy stock offers a compelling case for those looking to invest in the Canadian financial sector.
