MCAN Mortgage (MKP) AI Stock Analysis

• Market Cap: C$800.39M
• Dividend Yield: 7.85%
• Average Volume (3M): 40.74K
• Price to Earnings (P/E): 11.0
• Beta (1Y): 0.69
• Revenue Growth: 19.71%
• EPS Growth: -15.59%
• Country: CA
• Employees: 160
• Sector: Financial
• Sector Strength: 74
• Industry: Financial - Mortgages
• EPS (TTM): 0.43
• Shares Outstanding: 39,273,254
• 10 Day Avg. Volume: 39,680
• 30 Day Avg. Volume: 40,743
• PEG Ratio: -0.33
• Price to Book (P/B): 0.96
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 16.76
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: C$20.00
• Price Target Upside: -1.86% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 1

• Rating: 74 Outperform
• Price Target: C$21.50 ▲(5.50%Upside)

MCAN Mortgage's overall score reflects its strong financial performance and attractive valuation. The company's robust revenue growth, improved leverage, and high dividend yield are significant strengths. Positive corporate events bolster confidence in strategic initiatives. However, cash flow challenges and overbought technical indicators suggest caution. The overall outlook is positive, but attention to liquidity management is necessary.

Positive Factors

Dividend Yield

MKP shares offer a sustainable 8.6% yield underpinned by a conservative regular dividend payout and management's focus on maintaining net interest margins.

Operational Performance

MKP's core operating performance continues to demonstrate margin focus and impressive loan growth amid a challenged housing market.

Negative Factors

Earnings Performance

Q1/25 results were below expectations, with EPS of $0.43 compared to a consensus of $0.52.

Mortgage Impairment

Impaired mortgages tick higher to 246 bps of the corporate mortgage portfolio, mainly related to five construction mortgages.

MCAN Mortgage Business Overview & Revenue Model

Company Description

MCAN Mortgage Corporation operates as a loan and mortgage investment corporation in Canada. The company offers single-family residential mortgages, as well as residential construction, non-residential construction, and commercial loans, as well as engages in the real estate investments trusts and private investment activities. It also provides term deposits through a network of independent financial agents. The company was formerly known as MCAP Inc. and changed its name to MCAN Mortgage Corporation in September 2006. MCAN Mortgage Corporation was founded in 1980 and is headquartered in Toronto, Canada.

How the Company Makes Money

MCAN Mortgage generates revenue through several key streams. The company earns interest income from its portfolio of residential and commercial mortgages, which represents a substantial portion of its revenue. Additionally, MCAN benefits from securitization activities by packaging insured mortgages into securities and selling them, thereby earning fees and potentially gains on sales. The company also participates in the Canada Mortgage Bond Program, which provides a stable source of funding and income. Furthermore, MCAN Mortgage invests in real estate developments and other real estate-related investments, which can yield additional income. Strategic partnerships with financial institutions and real estate developers also contribute to its earnings by providing expanded opportunities for loan origination and investment.

MCAN Mortgage Financial Statement Overview

Summary

MCAN Mortgage exhibits strong revenue growth and profitability with efficient operational margins. However, cash flow challenges, such as negative free cash flow, indicate potential liquidity issues. Improved debt management and stable returns on equity are positive, but cash flow management needs attention.

Income Statement

MCAN Mortgage has shown robust revenue growth with a significant increase of 60.3% from 2024 to TTM (Trailing-Twelve-Months). The gross profit margin for TTM is 45.7%, indicating strong profitability. However, the net profit margin decreased compared to 2024, standing at 34.7% in TTM, which reflects a modest decline in net income efficiency. EBIT and EBITDA margins remain solid at 36.0% and 41.5% respectively, showcasing operational efficiency.

Balance Sheet

The company's debt-to-equity ratio has improved significantly to 0.19 in TTM, reflecting better leverage management. Return on Equity (ROE) is healthy at 11.7%, indicating effective utilization of equity. The equity ratio stands at 11.2%, suggesting a stable equity position, though there's room for strengthening equity relative to total assets.

Cash Flow

There was a noticeable decline in free cash flow, moving to negative territory in TTM. The operating cash flow to net income ratio has also turned negative, which raises concerns about cash generation capability relative to net income. The free cash flow to net income ratio is negative, highlighting challenges in converting income into free cash flow, although financing cash flow is positive, indicating some financial flexibility.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	204.39M	127.28M	123.94M	88.43M	96.50M	66.42M
Gross Profit	93.50M	127.28M	32.94M	32.99M	55.59M	26.87M
EBITDA	84.77M	104.94M	96.08M	132.12M	63.97M	42.65M
Net Income	70.96M	77.59M	77.50M	55.35M	64.36M	42.89M
Balance Sheet
Total Assets	5.44B	5.35B	4.74B	4.08B	3.81B	2.73B
Cash, Cash Equivalents and Short-Term Investments	113.56M	61.70M	60.34M	78.21M	122.27M	88.93M
Total Debt	113.93M	6.17M	66.38M	8.60M	1.70B	2.77M
Total Liabilities	4.84B	4.75B	4.21B	3.59B	3.37B	2.38B
Stockholders Equity	607.37M	599.19M	531.84M	489.31M	433.26M	346.51M
Cash Flow
Free Cash Flow	-38.32M	48.97M	-60.26M	27.98M	-113.73M	58.81M
Operating Cash Flow	-30.66M	53.77M	-59.59M	28.27M	-113.57M	59.12M
Investing Cash Flow	12.59M	13.79M	17.19M	18.07M	17.70M	15.22M
Financing Cash Flow	53.34M	21.92M	24.54M	-90.39M	129.22M	-39.87M

MCAN Mortgage Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 20.38
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:MKP, the sentiment is Positive. The current price of 20.38 is above the 20-day moving average (MA) of 19.64, above the 50-day MA of 19.28, and above the 200-day MA of 18.15, indicating a bullish trend. The MACD of 0.29 indicates Negative momentum. The RSI at 75.88 is Negative, neither overbought nor oversold. The STOCH value of 81.13 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:MKP.

MCAN Mortgage Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MKP	74 Outperform	C$800.39M	11.01	11.99%	7.85%	19.71%	-15.59%
TF	74 Outperform	C$647.13M	13.94	6.74%	8.83%	-8.68%	-25.42%
AI	68 Neutral	C$559.46M	11.27	9.47%	7.80%	-1.56%	-9.70%
FC	67 Neutral	C$451.49M	12.06	8.89%	8.34%	-4.56%	0.77%
Sector *	61 Neutral	C$15.14B	6.69	23.28%	5.39%	30.07%	-23.38%
DLCG	59 Neutral	C$702.36M	37.65	-151.96%	1.45%	35.48%	-4412.25%
VBNK	―	$377.71M	14.72	6.79%	0.05%	―	―

MCAN Mortgage Corporate Events

MCAN Financial Group Announces 2025 Director Election Results

MCAN Financial Group announced the election results for its board of directors during the 2025 Annual and Special Meeting of Shareholders. All director nominees were successfully elected, reflecting strong shareholder support. This outcome reinforces MCAN’s governance stability and may positively influence its strategic initiatives and stakeholder confidence.

MCAN Financial Group Reports Q1 2025 Results Amid Economic Challenges

MCAN Financial Group reported a net income of $16.6 million for Q1 2025, a decrease from $23.2 million in the same quarter of 2024, primarily due to higher provisions for credit losses amid challenging economic conditions. Despite these challenges, the company maintains a strong liquidity and capital position, and continues to focus on growth in its lending portfolio. The board declared a regular cash dividend of $0.41 per share for the second quarter, reflecting its strategy to distribute all taxable income to shareholders. Total assets increased to $5.4 billion, with notable growth in non-securitized assets and uninsured residential mortgage originations.