goeasy Ltd. (TSE:GSY), a Canadian non-prime consumer lender, reported strong Q1-2023 earnings results after the closing bell today, beating revenue and earnings-per-share (EPS) expectations. goeasy also updated its three-year outlook, as the Canadian government recently “announced through the Federal Budget its intent to reduce the maximum allowable rate of interest to an annual percentage rate (“APR”) of 35%,” which negatively affects GSY.
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In Q1, the company generated C$287 million in revenue, up 24% from C$232 million in the prior-year period, beating forecasts of C$281.89 million. Also, adjusted diluted EPS reached C$3.10, up 14% from C$2.72 in Q1 2022, surpassing the C$3.02 consensus estimate.
Loan originations reached C$616 million, a 29% increase from C$477 million in Q1 2022, which led to record loan growth of $196 million, 58% higher than the first quarter of 2022, and a loan portfolio of C$2.99 billion, 39% higher year-over-year.
Further, operating income increased by 28% to a record C$102 million, and the company’s operating margin increased to 35.5% from 34.4% in Q1 2022. Lastly, GSY’s adjusted return on equity was 23.9%, 10 basis points higher year-over-year.
goeasy’s Updated Outlook
In addition to reporting strong financial results, goeasy Ltd. updated its three-year outlook for 2023-25. The updated forecast for 2023 includes gross consumer loans receivable at year-end ranging from C$3.4 billion to C$3.6 billion and total company revenue between C$1.2 billion and C$1.25 billion. By 2025, the company expects gross consumer loans receivable to reach between C$4.7 and C$5.1 billion, with total company revenue of C$1.5 to C$1.7 billion.
These projections are only slightly different than the prior forecasts. For context, the previous revenue forecast for 2025 was C$1.56 billion to C$1.7 billion. Also, the company now expects an adjusted return on equity of over 21% for 2024 and 2025 compared to over 22%, while 2023 estimates remain unchanged at over 22%.
Is GSY Stock a Buy, According to Analysts?
On TipRanks, GSY stock has a Moderate Buy consensus rating based on five Buys and two Holds assigned in the past three months. The average GSY stock price target of C$147.27 implies 53.5% upside potential.
If you’re wondering which analyst you should follow if you want to buy and sell GSY stock, the most accurate analyst covering the stock (on a one-year timeframe) is Gary Ho from Desjardins, with an average return of 23.51% per rating. See below.
