Go Easy starts Online Payments and Increases E.P.S.

 Go Easy seems to never stop trying to improve it's operation.And to this end,it has taken a minority interest in an online payment company called Pay Bright.And in this time of a pandemic it has increased it's loan portfolio to $1.3 billion ( 18% increase) while reducing it's delinquency rate.So while revenues were only up 2% it recorded record low credit losses.The Go Easy CEO says that "these record results was driven by strong credit performance and prudent expense controls".

     Second Quarter Results

 Loan originations were down 38% to $171 million from $276 million.Still as pointed out in the opening paragraph the loan portfolio was up 18% to $1.3 billion.And importantly operating income of $54 million was up 32% from $41 million in 2019.This resulted in e.p.s. of  $1.89 which was up 50% from 2019. And the first half results of  $3.51 versus $2.44 in 2019.This means that Go Easy is on track to hit earnings of $6.50-$7.00 per share for the full year.And given the present P/E ratio of 12.5 this should mean that the price should gradually move towards the $80 price range.

     Online Payments

    GoEasy has not only reduced it's credit losses by tightening the credit application process it has also made it easier to make payments.It's minority interest in Pay Bright will move GSY into the online world.Surely it will gradually take a bigger share of equity and become a majority shareholder.Go Easy would do well to enlargen Pay Bright and increase it's business other than that with GSY.As this is a growing area in the Canadian environment and should pay off in the future.

     Secondly this could change gradually how investors view Go Easy.Now it has a P/E ratio of 12.5 because it is seen as a retailer.It is expected to have slow,steady growth with relatively low margins.But over time investors may see it as another online winner.These online phenomenons have much higher P/E ratios.For example,Real Matters has a P/E ratio of 45 and Lightspeed has a much higher P/E ratio.This will not happen right away but it will help to stretch the GSY P/E ratio even in 2021.If this happens then $80 will seem very reachable in early 2021.    https://www.zacks.com/