Monday, 7 March 2011

Carfinco – The Energizer Bunny Of Earnings

Carfinco Income Fund
TSX:CFN.UN
Shares Outstanding: 23.97 million
Units fully diluted: 24.6 million
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It would not be an embellishment of the facts to state that Carfinco's 2010 yearend earnings were astounding!

If this was the Olympics, Carfinco would be scoring gold in multiple categories. Earnings jumped an incredible 180% to a record $0.84 per unit compared to $0.30 in 2009. Below are just some of the highlights.

* Record net earnings for 2010 of $20.7 million;
* Record return on unitholder's equity for the year of 77.2%;
* Record loan originations of $97.0 million for 2010;
* Record finance receivables at the end of 2010 of $139.5 million;
* 31+ day delinquent accounts for the fourth quarter of 2010 are 2.9%.

The company has an annual growth target of 20% for finance receivables. This actually increased 23.2% over 2009 with last year's receivables hitting $139.5 million.

As a reminder, shareholders will now receive dividends, which have a more favourable tax treatment to fund distributions that were treated as income.

As of this writing the stock was trading at less than 8 times 2010 earnings but we do note that those are pre-tax numbers as Carfinco previously distributed its earnings as distributions to unit holders.

To read the news release click here.