Thursday, 10 March 2011

Two Good Bumps For Carfinco - Distributions & Analyst Target

Carfinco Income Fund
Shares outstanding: 24.5 million
Units fully diluted: 24.6 million
Current monthly distribution: $0.025


It was good news for Carfinco shareholders with yesterday's late day announcement that monthly cash distribution were increasing 25% from $0.02 to $0.025 per unit.

"The decision to increase the monthly cash distribution is a reflection of the Fund's financial performance," said Tracy Graf, CEO of the Fund. "The fourth quarter of 2010 was the seventh consecutive quarter of record net earnings and 2011 is off to a great start as management continues to execute its objective of growing the finance receivables by 20% per annum while maintaining delinquencies at acceptable levels."

Also, analyst Fred Westra from Industrial Alliance has increased his target price to $8.80 from $8.50 and maintained his Top Pick recommendation as noted below.

RECOMMENDATION As a result of our revised estimates, we are raising our target price to $8.80 from $8.50. Our valuation methodology remains unchanged, applying a 14x multiple on our fully taxed 2011E EPU (Earnings Per Unit) of $0.63 to derive our target. With strong reserves, little competition, and abundant growth opportunities, the 32.4% upside and a possible acquisition premium warrants our recommendation of TOP PICK.

He's also calling for $0.74 EPS in 2012. As of this writing the stock was trading in the $6.70 range or 10.9X projected 2011 earnings and 9X projected 2012 earnings per share.

The full Industrial Alliance report will be available on The Howard Group website early next week.