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MCAN Mortgage (TSE:MKP)
:MKP

MCAN Mortgage (MKP) AI Stock Analysis

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MCAN Mortgage

(TSX:MKP)

Rating:74Outperform
Price Target:
C$21.50
▲(10.65%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 9% 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.
Impaired Mortgages
Impaired mortgages tick higher to 246 bps of the corporate mortgage portfolio, mainly related to five construction mortgages.

MCAN Mortgage (MKP) vs. iShares MSCI Canada ETF (EWC)

MCAN Mortgage Business Overview & Revenue Model

Company DescriptionMCAN 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 MoneyMCAN 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
78
Positive
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
72
Positive
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
60
Neutral
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
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
204.39M127.28M123.94M88.43M96.50M66.42M
Gross Profit
93.50M127.28M32.94M32.99M55.59M26.87M
EBIT
73.55M76.55M90.36M132.12M63.97M42.65M
EBITDA
84.77M104.94M96.08M132.12M63.97M42.65M
Net Income Common Stockholders
70.96M77.59M77.50M55.35M64.36M42.89M
Balance SheetCash, Cash Equivalents and Short-Term Investments
154.03M61.70M60.34M78.21M122.27M88.93M
Total Assets
2.24B5.35B4.74B4.08B3.81B2.73B
Total Debt
1.09B6.17M66.38M8.60M1.70B2.77M
Net Debt
993.17M-55.53M-60.34M-69.61M1.57B-86.16M
Total Liabilities
1.96B4.75B4.21B3.59B3.37B2.38B
Stockholders Equity
285.71M599.19M531.84M489.31M433.26M346.51M
Cash FlowFree Cash Flow
-38.32M48.97M-60.26M27.98M-113.73M58.81M
Operating Cash Flow
-30.66M53.77M-59.59M28.27M-113.57M59.12M
Investing Cash Flow
12.59M13.79M17.19M18.07M17.70M15.22M
Financing Cash Flow
53.34M21.92M24.54M-90.39M129.22M-39.87M

MCAN Mortgage Technical Analysis

Technical Analysis Sentiment
Positive
Last Price19.43
Price Trends
50DMA
18.76
Positive
100DMA
18.46
Positive
200DMA
18.05
Positive
Market Momentum
MACD
0.24
Positive
RSI
55.45
Neutral
STOCH
50.30
Neutral
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 19.43 is above the 20-day moving average (MA) of 19.36, above the 50-day MA of 18.76, and above the 200-day MA of 18.05, indicating a bullish trend. The MACD of 0.24 indicates Positive momentum. The RSI at 55.45 is Neutral, neither overbought nor oversold. The STOCH value of 50.30 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:MKP.

MCAN Mortgage Peers Comparison

Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
TSTF
75
Outperform
C$614.03M13.236.74%9.30%-8.68%-25.42%
TSMKP
74
Outperform
C$761.11M10.5011.99%8.13%19.71%-15.59%
TSAI
68
Neutral
C$532.44M10.759.47%8.11%-1.56%-9.70%
TSFC
67
Neutral
C$455.16M12.168.89%7.55%-4.56%0.77%
64
Neutral
$12.86B9.797.78%16985.65%12.28%-7.82%
64
Neutral
C$746.31M37.65-151.96%1.37%35.48%-4412.25%
$340.81M13.056.79%0.69%
* Financial Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TSE:MKP
MCAN Mortgage
19.64
4.49
29.64%
TSE:AI
Atrium Mortgage Invest
11.27
0.96
9.31%
TSE:FC
Firm Cap Mortgage Invest
12.33
2.38
23.92%
TSE:DLCG
Dominion Lending Centres, Inc. (Canada) Class A
9.56
5.71
148.31%
TSE:TF
Timbercreek Financial
7.43
0.77
11.56%
VBNK
Versabank
11.15
0.59
5.59%

MCAN Mortgage Corporate Events

Executive/Board ChangesShareholder Meetings
MCAN Financial Group Announces 2025 Director Election Results
Positive
May 9, 2025

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.

DividendsBusiness Operations and StrategyFinancial Disclosures
MCAN Financial Group Reports Q1 2025 Results Amid Economic Challenges
Neutral
May 7, 2025

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.

Business Operations and Strategy
MCAN Financial Group Honored for Exemplary Corporate Culture
Positive
Apr 10, 2025

MCAN Financial Group has been recognized as one of Canada’s Most Admired Corporate Cultures for 2025 by Waterstone Human Capital. This accolade highlights MCAN’s commitment to a people-first culture, emphasizing values such as diversity, resilience, and innovation. The company’s focus on employee development and inclusion not only strengthens its internal culture but also enhances its service delivery to clients and partners. This recognition underscores MCAN’s strategic emphasis on culture as a driver of growth and community impact, positioning it as a leader in corporate culture best practices.

Business Operations and Strategy
MCAN Financial Group’s Tree Planting Initiative: A Commitment to Sustainability
Positive
Mar 20, 2025

MCAN Financial Group has successfully planted over 25,000 trees across Canada in partnership with One Tree Planted, reflecting its commitment to sustainability and environmental impact. This initiative, which plants four trees for every mortgage financed, aims to address reforestation needs in Canada and underscores MCAN’s dedication to environmental stewardship and fostering a values-driven corporate culture.

Executive/Board ChangesBusiness Operations and Strategy
MCAN Mortgage Appoints Derek Sutherland as President and CEO
Positive
Mar 18, 2025

MCAN Mortgage Corporation has appointed Derek Sutherland as its new President and CEO, effective April 1, 2025. Sutherland, who has been with the company in various leadership roles since 2017, including Interim CEO and Chair of the Board, is expected to lead MCAN with a focus on sustainable growth and shareholder returns. His appointment is seen as a strategic move to leverage his extensive experience in finance, risk management, and governance to strengthen MCAN’s market position and operational success.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.