Q: GSY was my top TFSA holding and has slid with the huge downturn. It is my understanding that the company reports in the next day or two.
I am reluctant to head for the exits as I don't understand whether holding for a few years will allow a moderate recovery or if the company could literally go out of business. Is failure a probable outcome? Target prices by analysts (I know these are NOT very reliable) are still well above current prices.
Do you think the upcoming earnings report will allow for a proper assessment of the company or can they hide / spin things in a way that holding could just brings years of pain?
TODAY, would you HOLD?
I am reluctant to head for the exits as I don't understand whether holding for a few years will allow a moderate recovery or if the company could literally go out of business. Is failure a probable outcome? Target prices by analysts (I know these are NOT very reliable) are still well above current prices.
Do you think the upcoming earnings report will allow for a proper assessment of the company or can they hide / spin things in a way that holding could just brings years of pain?
TODAY, would you HOLD?
5i Research Answer:
GSY recently reported earnings and as expected they were not great. Revenue was $406 mln and loss per share was $8.93. The loan portfolio rose 20%. The charge off rate was 23.8%. For Q1 GSY expects charge offs of 17.5% to 18.5% and expect this to be in the mid-teens on the full year, declining as the year progresses. We think the company is wrapping their arms around the problem and the 'tail risks' are slowly but surely being removed from the company. Regardless though, it will take time for the company to work through this and regain market trust.