ECN Capital (ECN) AI Stock Analysis

• Market Cap: C$717.62M
• Dividend Yield: 1.57%
• Average Volume (3M): 173.60K
• Price to Earnings (P/E): 91.1
• Beta (1Y): 1.15
• Revenue Growth: 54.95%
• EPS Growth: N/A
• Country: CA
• Employees: 690
• Sector: Financial
• Sector Strength: 82
• Industry: Financial - Credit Services
• EPS (TTM): 0.04
• Shares Outstanding: 281,418,880
• 10 Day Avg. Volume: 152,768
• 30 Day Avg. Volume: 173,602
• PEG Ratio: 0.47
• Price to Book (P/B): 3.00
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 7.79
• Enterprise Value/Market Cap: 1.61
• Enterprise Value/Revenue: 1.51
• Enterprise Value/Gross Profit: 11.42
• Enterprise Value/Ebitda: 18.42
• 1Y Price Target: C$3.50
• Price Target Upside: 37.25% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 1

• Rating: 60 Neutral
• Price Target: C$3.00 ▲(17.65%Upside)

The overall score reflects strong earnings call performance and robust cash flow, offset by high valuation concerns and mixed technical indicators. High leverage remains a risk, impacting the financial stability score.

Positive Factors

Future Guidance

ECN maintains its 2025 guidance for significant growth in originations and operating income.

Segment Growth

ECN's Marine and RV segment showed significant year-over-year growth in originations, aided by sales network expansion.

Negative Factors

Financial Performance

Q4/24 adjusted EPS missed consensus and guidance expectations, indicating financial performance challenges.

Leadership Uncertainty

There are uncertainties in guidance and execution due to leadership and strategy changes at Triad, which may impact future performance.

Manufactured Home Segment

The manufactured home segment experienced a decline in originations, which was below estimates, affected by severe weather.

ECN Capital Business Overview & Revenue Model

Company Description

ECN Capital Corp. originates, manages, and advises on prime consumer credit portfolios in North America. It operates through Secured Consumer Loans - Triad Financial Services and Source One; and Consumer Credit Card and Related Unsecured Consumer Loans - KG segments. The company provides secured consumer loan portfolios, including manufactured home, marine, and recreational vehicle loans; and consumer credit card portfolios that are focused on co-branded credit cards and related financial products. It serves banks, credit unions, life insurance companies, and pension and investment funds. The company was incorporated in 2016 and is headquartered in Toronto, Canada.

How the Company Makes Money

ECN Capital makes money through a variety of revenue streams centered around its expertise in financial services. The company's primary sources of revenue include interest income from its lending activities, fees for managing and advising on credit assets, and gains from the sale and securitization of financial assets. ECN Capital also generates income from servicing agreements and partnerships with financial institutions, where they leverage their expertise to manage portfolios on behalf of their clients. Additionally, the company benefits from strategic partnerships with banks and other financial entities, which help expand its service offerings and reach within the financial sector.

ECN Capital Financial Statement Overview

Summary

ECN Capital demonstrates strong cash flow performance and improved operational efficiency, but struggles with declining revenue and high leverage. The company's ability to generate cash is a positive, yet the reliance on debt could pose risks if revenue growth does not stabilize.

Income Statement

ECN Capital's income statement shows mixed performance. The gross profit margin for TTM is 47.48%, reflecting a strong ability to manage costs relative to revenues. However, the net profit margin is only 6.37%, indicating that profitability is low after accounting for all expenses. Revenue growth from 2024 to TTM was negative at -3.47%, signaling a decline in top-line performance. The EBIT margin improved to 14.18% from the previous year, showing operational improvements, while the EBITDA margin is at 20.26%, highlighting decent earnings before non-cash expenses.

Balance Sheet

The balance sheet exhibits high leverage, with a debt-to-equity ratio of 2.87 in TTM, indicating significant reliance on debt financing. The equity ratio stands at 21.40%, suggesting a moderate level of assets funded by shareholders. Return on equity (ROE) improved to 6.80% in TTM, showing better returns to shareholders but remains low in absolute terms.

Cash Flow

ECN Capital's cash flow performance is robust. Free cash flow grew significantly in TTM compared to the previous year, reaching $76.95 million. The operating cash flow to net income ratio is 5.73, indicating strong cash generation relative to net earnings. Additionally, the free cash flow to net income ratio of 5.67 suggests efficient conversion of profits into cash.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
213.08M	220.76M	159.32M	196.67M	215.37M	266.72M
	Gross Profit
101.16M	88.15M	17.12M	90.81M	120.77M	167.44M
	EBIT
30.21M	15.05M	-56.20M	31.08M	19.38M	75.28M
	EBITDA
43.18M	32.19M	-40.84M	44.03M	-9.94M	22.68M
	Net Income Common Stockholders
13.58M	7.63M	-106.78M	6.72M	4.97M	15.82M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
18.26M	15.46M	23.24M	12.71M	45.04M	37.98M
	Total Assets
933.46M	937.15M	1.28B	1.42B	1.15B	1.71B
	Total Debt
573.33M	590.94M	917.70M	1.01B	274.60M	531.79M
	Net Debt
555.08M	575.48M	894.46M	995.28M	229.56M	493.81M
	Total Liabilities
730.23M	726.25M	1.08B	1.22B	927.49M	883.64M
	Stockholders Equity
199.84M	207.48M	209.49M	193.68M	218.63M	822.56M
Cash Flow		Free Cash Flow
76.95M	179.73M	-45.44M	-912.20M	131.76M	-80.27M
	Operating Cash Flow
77.79M	180.86M	-26.03M	-869.27M	139.73M	-77.61M
	Investing Cash Flow
9.14M	147.75M	43.38M	116.25M	-79.83M	-3.19M
	Financing Cash Flow
-76.03M	-334.89M	-6.79M	721.07M	-1.83B	35.14M

ECN Capital Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 2.55
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:ECN, the sentiment is Negative. The current price of 2.55 is below the 20-day moving average (MA) of 2.78, below the 50-day MA of 2.73, and below the 200-day MA of 2.72, indicating a bearish trend. The MACD of -0.06 indicates Positive momentum. The RSI at 41.00 is Neutral, neither overbought nor oversold. The STOCH value of 13.01 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:ECN.

ECN Capital Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MKP	74 Outperform	C$761.11M	10.50	11.99%	8.13%	19.71%	-15.59%
GSY	74 Outperform	$2.47B	9.87	23.56%	3.18%	18.04%	2.48%
GCG	70 Outperform	C$1.00B	14.17	5.62%	3.60%	35.78%	-24.67%
CF	67 Neutral	$975.05M	164.20	-1.78%	3.57%	14.45%	-22.63%
Sector *	64 Neutral	$12.87B	9.81	7.76%	16985.65%	12.28%	-7.83%
DLCG	64 Neutral	C$746.31M	37.65	-151.96%	1.37%	35.48%	-4412.25%
ECN	60 Neutral	C$717.62M	91.07	6.65%	1.57%	54.95%	―

ECN Capital Corporate Events

ECN Capital Announces Board Election Results and Strategic Appointment

ECN Capital Corp. recently held its annual meeting where eight directors were elected, and several resolutions were passed with overwhelming support. Notably, Tarun Mehta was elected to the board, bringing extensive experience from his previous role at Truist Financial Corporation. His appointment as Chair of the Credit & Risk Committee is expected to strengthen ECN Capital’s strategic direction. The meeting results, including the re-appointment of auditors and approval of various plans, reflect strong shareholder confidence in the company’s governance and future plans.

The most recent analyst rating on (TSE:ECN) stock is a Hold with a C$2.35 price target. To see the full list of analyst forecasts on ECN Capital stock, see the TSE:ECN Stock Forecast page.

ECN Capital Corp. Achieves Strong Q1 2025 Financial Results

ECN Capital Corp. reported a strong financial performance for the first quarter of 2025, with adjusted net income reaching $0.03 per share, hitting the top end of its guidance. The company demonstrated resilience amid market volatility, with significant originations in its key segments and an increase in managed assets to $7.2 billion. The Board of Directors declared dividends for common and preferred shareholders, reflecting confidence in the company’s financial health. These results underscore ECN Capital’s robust operational capabilities and its strategic positioning in the financial services sector.

ECN Capital to Release Q1 2025 Financial Results and Host Analyst Briefing

ECN Capital Corp. has announced its intention to file its financial statements and management discussion for Q1 2025 on May 8, 2025, after market close. The company will hold an analyst briefing to discuss these results on the same day. This announcement is significant as it provides stakeholders with insights into the company’s financial performance and strategic direction, potentially impacting its market positioning and investor relations.

ECN Capital Closes Additional C$8 Million Debenture Offering

ECN Capital Corp. announced the closing of an additional C$8 million offering of 6.50% convertible senior unsecured debentures, following the exercise of an over-allotment option by a syndicate of underwriters. This brings the total gross proceeds from the offering to C$83 million, which will support the company’s operations and potentially enhance its market position by providing high-quality assets to its partners.

ECN Capital Closes C$75 Million Debenture Offering

ECN Capital Corp. has successfully closed a C$75 million offering of 6.50% convertible senior unsecured debentures due in 2030. The proceeds from this offering will be used to redeem the company’s outstanding 6.00% senior unsecured debentures due December 2025. This strategic move is expected to streamline ECN Capital’s financial obligations and potentially enhance its market position by reducing debt costs. The new debentures will trade on the Toronto Stock Exchange, and the redemption of the older debentures will lead to their delisting.

ECN Capital Announces C$75 Million Convertible Debenture Offering

ECN Capital Corp. has announced a C$75 million bought deal offering of 6.50% listed convertible senior unsecured debentures, set to mature on April 30, 2030. The proceeds from this offering are intended to redeem existing senior unsecured debentures due December 31, 2025, subject to lender approval, and may also be used to manage existing indebtedness. This move is part of ECN Capital’s strategic financial management to optimize its debt structure, potentially impacting its market positioning and stakeholder interests.