A proven strategy to generate market-beating returns is to identify high-quality, undervalued growth stocks. One such undervalued Canadian stock is goeasy (TSX:GSY), which is down almost 40% from all-time highs.
Let’s see why you should own goeasy stock right now.
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goeasy has delivered solid returns to shareholders
Valued at a market cap of $2.15 billion, goeasy is part of the financial lending segment. goeasy has delivered exceptional shareholder returns over the past two decades, positioning itself as Canada’s leading non-prime consumer lender.
The TSX stock has generated a total shareholder return of over 1,700% since 2008. Moreover, it is ranked third among TSX financial companies based on five-year diluted earnings per share growth.
The Mississauga-based lender has originated $18.5 billion in loans to 1.6 million Canadians across approximately 400 locations nationwide. With 34 years of experience in the non-prime lending sector, goeasy serves customers who typically fall outside traditional banking channels through its easyhome, easyfinancial, and LendCare brands.
It has raised the annual dividend for 11 consecutive years, and currently offers shareholders a tasty yield of 4.6%. With $2.3 billion in total liquidity, goeasy has enough room to fund organic growth initiatives.
goeasy has maintained an average return on equity of almost 24% over the past five years, which is exceptional. The company uses risk-based pricing to help customers graduate to lower interest rates over time while prudently managing credit risk through established underwriting practices.
A strong performance in Q3
In the third quarter (Q3) of 2025, goeasy reported strong results amid a challenging macro environment. The non-prime lender grew its loan book by $336 million to $5.44 billion, driven by $946 million in originations during the quarter.
It reported record revenue of $440 million, up 15% year over year. However, earnings per share narrowed to $4.12 from $4.32 a year earlier, due to lower portfolio yields and increased provisions for credit losses.
goeasy raised its allowance for credit losses from 7.9% to 8.1% in response to elevated early-stage delinquencies. Chief Executive Dan Rees acknowledged the quarter began with the company’s shares near all-time highs following a successful $796 million bond offering.
That momentum reversed after a short-seller report emerged, though Rees emphasized management remains focused on long-term value creation through prudent growth.
goeasy improved its net charge-off rate to 8.9%, down 30 basis points year over year. Late-stage delinquencies held steady at 2.8% of the portfolio, while early-stage delinquencies climbed to 4.5%, up 60 basis points from the prior quarter.
Chief Risk Officer Jason Appel noted that approximately one in ten borrowers currently use the company’s borrower assistance tools, which help customers manage temporary financial stress.
These programs allow borrowers to modify payment schedules while maintaining their credit profiles. Management emphasized that these tools represent standard industry practice and help reduce costly legal actions.
The company provided Q4 guidance for loan book growth of $250 million to $275 million. Portfolio yield expectations were adjusted to a range of 30.5% to 31.5% to reflect the federal interest rate cap of 35% as it moves through the portfolio.
About 18% of the loan book currently carries rates above the cap, down from roughly one-third at the start of the year.
Is the Canadian stock undervalued?
Analysts tracking goeasy stock forecast revenue to increase from $1.52 billion in 2024 to $2.15 billion in 2027. In this period, adjusted earnings per share are forecast to expand from $16.71 to $24.77.
GSY stock is trading at 6.9 times forward earnings, below its 10-year average of 9.8 times. At the current multiple, the Canadian stock should surge 26% over the next 12 months. If we account for dividends, cumulative returns should be closer to 31%.
