Bullboard - Stock Discussion Forum ECN Capital Corp T.ECN.PR.C

Primary Symbol: T.ECN Alternate Symbol(s): ECNCF | ECNNF | T.ECN.DB | T.ECN.DB.A | T.ECN.DB.B

ECN Capital Corp. is a Canada-based provider of business services to North American banks, credit unions, life insurance companies, pension funds and institutional investors (collectively, its Partners). The Company originates, manages and advises on credit assets on behalf of its Partners, specifically consumer (manufactured housing and recreational vehicle and marine) loans and commercial... see more

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TSX:ECN - Post Discussion

ECN Capital Corp > TD

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Post by retiredcf on Nov 10, 2022 9:12am

TD

ECN Capital Corp.

(ECN-T) C$3.45

Q3/22: Focused on Rolling Up Marine/RV Space Event

ECN reported Q3/22 adjusted operating EPS from continuing operations of $0.05, up from $0.01 last year and in line with our $0.05 estimate. Reported EPS from continuing operations was $0.03, with the difference relative to adjusted EPS being stock-based compensation and amortization of intangibles.

ECN announced an NCIB for up to 10% of common shares during the quarter. Although ECN has repurchased only a modest amount of stock under the NCIB in 2022, it has historically been active in repurchasing stock (37% of total common shares since 2017).

Impact: NEGATIVE (2023 guidance lowered, but our estimate already reflected lower EPS)

Triad reported pretax adjusted income of $21.0mm, up 30% y/y and in line with our forecast, reflecting 27% origination growth and higher floorplan loan balances (up more than double y/y). Margins remain relatively in line with last year and our forecast. Originations of $381mm grew 27% y/y and were in line with our estimate. While 27% originations growth is strong, relative to recent trends and ECN's initiatives in MH, growth was clearly impacted by lower housing completions caused by Hurricane Ian. Triad's leading position in affordable housing is particularly well-situated as rising housing costs shift demand away from traditional housing options to Triad's financing options.
Marine & RV reported pretax adjusted income of $5.0mm, in line with our $5.1mm estimate, reflecting originations of $298mm (in line with our estimate). Margins were also in line with our forecast. Originations and earnings guidance in the segment were raised materially to reflect the acquisition of IFG. We have raised our estimates slightly. The company is in negotiations with three additional Marine & RV finance companies.

TD Investment Conclusion

Our 2023 EPS estimate of $0.25 is at bottom end of guidance ($0.25-$0.30, down from $0.30-$0.35, reflecting lower M&A accretion). Our of C$5.00 target price is based on a 15.0x P/E multiple applied to our one-year forward EPS estimates (Q1/23E to Q4/23E). Our target P/E and BUY rating are supported by our view that through strategic capital allocation as well as the inherent value of MH financing (affordability), the business will continue to report solid growth, albeit at a slower pace than in 2022.