Thursday, 3 October 2013

Another Target Price Increase For Carfinco – Industrial Alliance Provides Update

TSX: CFN
Shares Outstanding: 26.4 million
Shares Fully Diluted: 26.4 million
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Just a month after releasing its $12.50 target on Carfinco, Industrial Alliance has increased its target price to $13.50. 
 
The increase is primarily the result of Carfinco’s recent acquisition of Persian Acceptance Corp. (PAC), an American auto finance company, as well as the addition of PAC’s president, Peter Miller, to Carfinco’s Board of Directors. With 19 years of direct experience in the U.S. sub-prime auto lending industry, the report suggests that Mr. Miller’s knowledge and support will allow Carfinco to penetrate the U.S. market with less risk.

Industrial Alliance analyst, Fred Westra, increased the 2013 and 2014 EPS to $0.92 and $1.15 from $0.91 and $1.08, thereby increasing the target price to $13.50 based on a multiple of 12x the 2014 EPS and an expected total return of 39.2% of warrants.

Mr. Westra describes Carfinco as “a phenomenal Company with sustainable 15-20% loan growth; one of the best efficiency ratios in the lending space; superior capital allocation with an ROE of 41.8%; solid risk management; and a 5.3% dividend yield (48.4% distributable cash payout).”

To view the report in its entirety, please click here....