Goeasy Thriving Under Economic Uncertainty

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.