ECN CN

ECN Capital Corp

Finance/Real Estate


Presented:03/17/2021
Price:CA$8.03
Cap:$1.57B
Current Price:CA$2.14
Cap:$0.48B

Presented

Date03/17/2021
PriceCA$8.03
Market Cap$1.57B
Ent Value$1.90B
P/E RatioN/A
Book ValueCA$3.56
Div Yield1.62%
Shares O/S244.55M
Ave Daily Vol494,526
Short IntN/A

Current

PriceCA$2.14
Market Cap$0.48B
ECN Capital Corp. provides business services to North American based banks, credit unions, life insurance companies, pension funds and investment funds. Its services are offered through three operating businesses: Service Finance, Triad Financial Services, and The Kessler Group. The Service Finance business offers installment loan solutions for qualified borrowers with favourable consumer interest rates and extended repayment terms. The Triad Financial Services business provides services in Manufactured Home lending. The Kessler Group business develops partnerships, optimize the value of credit card portfolios, fund risk-based marketing campaigns, and develop and execute marketing strategies. It manages, advises, and structures credit card and other consumer portfolios for credit card issuers, banks, credit unions, processors, and payment networks. The company was founded on July 22, 2016 and is headquartered in Toronto, CA.

Publicly traded companies mentioned herein: Affirm Holdings Inc (AFRM), ECN Capital Corp (ECN CN), GreenSky Inc (GSKY), Synchrony Financial (SYF), Truist Financial Corp (TFC), Wells Fargo & Co (WFC)

Highlights

The presenter is long shares of ECN Capital Corp (ECN CN), a Canadian company that spun off Element Financial in 2016, at which point ECN owned aircraft and rail leases. ECN has since divested that book of business and acquired three financial services businesses that the presenter is bullish on: Service Finance, Triad Financial Services, and Kessler Group. The stock trades at C$8 per share (~9x the Street’s C$0.88 2023 earnings expectations, which he considers conservative), but earnings are quoted in USD which causes investors to mistakenly view it as more expensive than it really is. In his opinion, this valuation is cheap considering ECN’s competitive moat, attractive growth profile, and strong EBITDA margins. 

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