ECN Capital Stock: Should You Buy the Dip?

ECN Capital (TSX:ECN) is a Toronto-based company that creates, manages and advises leading consumer credit portfolios in North America. Shares of this TSX stock are down 39% in 2022 as of the November 15 close. The stock fell 70% in the year-over-year period.

The North American consumer finance industry has faced major challenges in the form of aggressive interest rate tightening from the US Federal Reserve and the Bank of Canada (BoC) . Credit growth has already taken a hit, but lenders should also see their profit margins improve significantly in this environment. That should give investors pause, as this TSX stock has been hit hard by volatility.

This company released its results for the third quarter of fiscal 2022 on November 9. It reported adjusted net income of $11.8 million or $0.05 per share, compared with $11.3 million or $0.03 per share a year earlier. During the quarter, CEO Steve Hudson praised its performance in the third quarter due to strong consumer demand in its manufactured home and marine and recreational vehicle segments. ECN Capital recorded originations of $679 million, compared to $613 million in the third quarter of fiscal 2021.

Shares of this TSX stock currently have a very favorable price/earnings ratio of 0.6. Meanwhile, the stock has a Relative Strength Index (RSI) of 28 at the time of this writing. This puts ECN Capital in technical oversold territory. ECN Capital last paid a quarterly dividend of $0.01 per share. This represents a modest return of 1.2%.

Sallie R. Loera