Wednesday, 26 February 2014

Cormark Securities - Carfinco A BUY


On February 20th, Cormark analysts Jeff Fenwick and Gavin Fairweather initiated coverage on Carfinco recommending it as a buy with a target price of $14.00.

We do not have permission to post the report but some highlights include:

  • Carfinco is a leading player in subprime auto finance
  • Subprime is a large and lucrative business
  • Managing risk is key in deep subprime – a combination of pricing, processes and technology
  • Sound underwriting practices supported Carfinco through the downturn
  • Strong growth has translated into solid bottom-line performance
  • Industry and economic factors all positives for Carfinco
  • Seeking Growth in the U.S. with potentially more M&A south of the border
  • The U.S. offers up a big potential market
  • ROE will remain very high, although gradually tapering
  • Dividends will continue to provide incremental returns for investors
  • The $14 target is based on 13x 2014’s projected earnings per share of $1.06

Cormark is the 6th Canadian firm to pick up coverage of the solid performer where the target price ranges between $13.00 and $14.50.

Shares Outstanding: 26.4 million
Shares Fully Diluted: 26.4 million