Q: Hi - how will EFN do in a recession? Is it structured to do well (relatively speaking)?
5i Research Answer:
EFN was not around in its current form in the 2008 financial crisis/recession. But it survived the brief pandemic recession quite well. Its business is highly sensitive to interest rates. In most recessions, rates decline, and this is good for the business. However, the overall economy can contract, and this is an offset. Stagflation--high rates and no growth--would be likely more concerning for the company. But, overall, we would not generally consider it a 'safe' stock in most recessionary scenarios.