Investors continue to pour cash into the small cap power house, ECN Capital Corp. (TSE:ECN). With C$41 billion managed and advised assets, ECN Capital is an industry leader in originating, managing and advising on prime credit portfolios.
ECN’s most recent earnings in Q1 2021 boasted a C$35.5 adjusted EBIDTA, as well as a share increase of over C$2 from C$8.35 end of Q1 2021, to its current market share price C$10.15.
“ECN had strong Q1 results across each of the businesses,” said Steven Hudson, CEO of ECN Capital Corp. “$0.08 (USD) per share is at the high end of our Q1 guidance of $0.07-$0.08 from our Investor Day.”
Although ECN is up 58% year-to-date, and continues to impress with its diversified business approach, some investors have been turned off by its low dividend, currently yielding 1.07%. (See ECN stock charts on TipRanks)
ECN Continues to Carry Momentum
ECN made a series of strong deals in 2017 that not only increased the share price of the company, but also led many analysts to consider ECN as a long-term investment. Its largest sale was to PCN Capital for C$1.57 billion. In addition to selling its U.S. commercial and vendor finance business, it also sold its rail car financing business for C$1.81 billion, along with four other large sales, generating billions.
Constantly looking for new entry points and sectors to explore, ECN Capital focuses on three main points in its business model. One is Service Finance – home improvement loan programs, another is Triad Financial Services – offering consumer loans for residential homes, and the third is The Kessler Group – a management solution for consumer credit card portfolios.
ECN’s relentless, proactive approach, seen most clearly from a barrage of deals beginning in 2017, has led the Canadian financial company to grow significantly over the past few years. Q1 2021 showed ECN’s HVAC loans business jump 42% year over year. Meanwhile, borrowing for windows and doors increased 64%, and its manufactured homes originations shot up 37% year over year.
What Analysts are Saying About ECN Capital
According to TipRanks’ analyst rating, the ECN Capital is viewed as a Strong Buy. Out of 5 analysts, all had Buy ratings.
The average ECN Capital price target is C$11.55 (11.9% upside), with a high forecast of C$12.5 and a low forecast of C$10.25. The average price target represents a 11.92% change from the last price of C$10.15.
Bottom Line
ECN Capital is a stock with a great upside, based on its consistent approach to remaining competitive with U.S. bank partners. Its collaborations with major chains like Sam’s Club, part of the big box retail program launched in April 2021, along with its wealth of portfolios, make this stock worth considering.
Additionally, the post-pandemic building craze has positively impacted ECN Capital growth forecast in the home improvement sector. As mentioned in the ECN Q1 2021 Earnings Report, “Post-Covid, demand increased as homeowners focus on larger projects that require professional contractors in the home.” The company’s total assets, as well as shareholder equity, also increased in Q1 2021.
TipRanks’ Investors continue to be very positive about ECN, with 4.2% of investors who hold portfolios on TipRanks adding ECN to their portfolios in the last 30 days. They likely recognize that credit services will continue to be in full demand, as Canada and the U.S. struggle to find new ways to compensate for losses incurred during the height of the pandemic.
Disclosure: Lukas Brenowitz held no position in any of the stocks mentioned in this article at the time of publication.
Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.
