This is a quick follow-up from my original thesis. If you are not a subscriber, I recommend checking it out before reading for further context and insights. [Link]
This same post but with images [Link]
Disclaimer: Nothing in this post shall be considered a financial recommendation. Do your due diligence.
Key Bullet Points from Goeasy’s FY22’ Results
- Morosity rate didn't rise under the recession/recession fears. It actually declined.
- Adjusted ROE decreased from 26.2% in 2021 to 24,6% in 2022 (they issued some shares to finance the new growth opportunity).
- Flat easyhome segment revenues despite the decrease in houses sold. (There’s a big misconception that Goeasy offers mortgages but they don’t!)
- Margins shrunk because of the termination of a contract (non-recurrent cost).
“As such, the Company elected to write off capitalized software costs in 2022 in the amount of $20.5 million, associated with the loan management system being developed by the third-party. The matter is now closed, and the Company does not carry any additional liability. The Company does not anticipate this decision to affect its ability to achieve its long-term organic growth forecast and expects to further reduce its capital expenditures over the course of 2023 and 2024 by approximately $20 million. “
- Record adjusted operating income (16% increase YoY).
- Record adjusted diluted eps (11% increase YoY).
- An increase of 5.5%. in their dividend to $3.84 per share.
- Increased 3-year guidance.
A Comment From The Writer
Thank you for reading this post and for all the support the newsletter is receiving. I wasn’t expecting this many subscribers so soon.
As you know, I try to be completely transparent. Truth is I can’t believe this company is being offered at a PE of 8x. To date I got more than 25% of my portfolio in this single stock.
Thank you for reading.
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