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  5. GSY: In some answers, you have referred to some lending companies being exposed to a "rate risk". [goeasy Ltd.]
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Q: In some answers, you have referred to some lending companies being exposed to a "rate risk". I am not clear what that is / when it will impact a lending company. More specific to GSY....is it exposed to a rate risk? How will anticipated falling rates affect it? I know that new highs ( or at lest here a recent one) do not concern you but given its run up in recent months, are its valuation metrics still looking favourable?
Thanks for your excellent service.
Asked by Leonard on January 29, 2024
5i Research Answer:

GSY and lending companies are subject to rate risk first from the potential lowered demand from consumers due to higher rate costs. Additionally, rate risk implies default risk from consumers, as rates rise the potential for certain customers to not be able to pay back their loans would harm GSY. Lastly, it can be common for lenders to borrow money to fund lending activity, so as rates rise, costs to lend do as well. 

Valuation still looks very attractive to us at 9.9x forward price-to-earnings and 1.9x forward sales. Solid growth is forecasted fo EPS and revenue over the next two years.