TSX:HCG

Stock Analysis Report

Home Capital Group

Executive Summary

Home Capital Group Inc., through its subsidiary, Home Trust Company, provides residential and nonresidential mortgage lending, securitization of residential mortgage products, consumer lending, and credit card services in Canada.


Snowflake Analysis

Very undervalued with adequate balance sheet.


Similar Companies

Share Price & News

How has Home Capital Group's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: HCG's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

-4.3%

HCG

9.7%

CA Mortgage

4.5%

CA Market


1 Year Return

-4.0%

HCG

-24.1%

CA Mortgage

-24.5%

CA Market

Return vs Industry: HCG exceeded the Canadian Mortgage industry which returned -24.1% over the past year.

Return vs Market: HCG exceeded the Canadian Market which returned -24.5% over the past year.


Shareholder returns

HCGIndustryMarket
7 Day-4.3%9.7%4.5%
30 Day-46.3%-39.2%-20.1%
90 Day-53.7%-45.3%-24.9%
1 Year-4.0%-4.0%-15.3%-24.1%-22.0%-24.5%
3 Year-41.0%-41.0%-11.7%-25.8%-14.2%-22.2%
5 Year-64.0%-66.1%-11.9%-29.3%-1.9%-16.5%

Price Volatility Vs. Market

How volatile is Home Capital Group's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Home Capital Group undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: HCG (CA$15.27) is trading below our estimate of fair value (CA$56.95)

Significantly Below Fair Value: HCG is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: HCG is good value based on its PE Ratio (6.7x) compared to the Mortgage industry average (6.7x).

PE vs Market: HCG is good value based on its PE Ratio (6.7x) compared to the Canadian market (10.3x).


Price to Earnings Growth Ratio

PEG Ratio: HCG is good value based on its PEG Ratio (0.5x)


Price to Book Ratio

PB vs Industry: HCG is good value based on its PB Ratio (0.5x) compared to the CA Mortgage industry average (0.7x).


Next Steps

Future Growth

How is Home Capital Group forecast to perform in the next 1 to 3 years based on estimates from 7 analysts?

14.6%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: HCG's forecast earnings growth (14.6% per year) is above the savings rate (1.4%).

Earnings vs Market: HCG's earnings (14.6% per year) are forecast to grow faster than the Canadian market (7.4% per year).

High Growth Earnings: HCG's earnings are forecast to grow, but not significantly.

Revenue vs Market: HCG's revenue (6% per year) is forecast to grow faster than the Canadian market (3.8% per year).

High Growth Revenue: HCG's revenue (6% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: HCG's Return on Equity is forecast to be low in 3 years time (10.9%).


Next Steps

Past Performance

How has Home Capital Group performed over the past 5 years?

-28.2%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: HCG has a high level of non-cash earnings.

Growing Profit Margin: HCG's current net profit margins (31.2%) are lower than last year (33.3%).


Past Earnings Growth Analysis

Earnings Trend: HCG's earnings have declined by -28.2% per year over the past 5 years.

Accelerating Growth: HCG's earnings growth over the past year (2.6%) exceeds its 5-year average (-28.2% per year).

Earnings vs Industry: HCG earnings growth over the past year (2.6%) underperformed the Mortgage industry 12.7%.


Return on Equity

High ROE: HCG's Return on Equity (8.1%) is considered low.


Next Steps

Financial Health

How is Home Capital Group's financial position? (This company is analysed differently as a bank or financial institution)


Financial Position Analysis


Debt to Equity History and Analysis


Balance Sheet

Inventory Level: HCG has a low level of unsold assets or inventory.

Debt Coverage by Assets: HCG's debt is not covered by short term assets (assets are 0.5x debt).


Financial Institutions Analysis

Asset Level: HCG's level of assets compared to its equity is moderate.

Allowance for Bad Loans: HCG has a low allowance for bad loans.

Low Risk Liabilities: HCG's liabilities are made up of primarily low risk sources of funding.

Loan Level: HCG has an acceptable proportion of non-loan assets held.

Low Risk Deposits: HCG has advanced significantly more loans than the customer deposits it holds.

Level of Bad Loans: HCG has an appropriate level of bad loans (0.58%)


Next Steps

Dividend

What is Home Capital Group's current dividend yield, its reliability and sustainability?

1.78%

Forecast Dividend Yield


Dividend Yield vs Market

Notable Dividend: Unable to evaluate HCG's dividend yield against the bottom 25% of dividend payers, as the company has not reported any payouts.

High Dividend: Unable to evaluate HCG's dividend yield against the top 25% of dividend payers, as the company has not reported any payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if HCG's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if HCG's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: HCG is not paying a notable dividend for the Canadian market.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of HCG's dividend in 3 years as they are not forecast to pay a notable one for the Canadian market.


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

2.5yrs

Average management tenure


CEO

Yousry Bissada (59yo)

2.58s

Tenure

CA$2,410,788

Compensation

Mr. Yousry Bissada has been President and Chief Executive Officer at Home Capital Group Inc. and Home Trust Company since August 3, 2017. Mr. Bissada has been the President and Chief Executive Officer at H ...


CEO Compensation Analysis

Compensation vs Market: Yousry's total compensation ($USD1.71M) is above average for companies of similar size in the Canadian market ($USD1.23M).

Compensation vs Earnings: Yousry's compensation has increased by more than 20% in the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Yousry Bissada
President2.58yrsCA$2.41m0.095% CA$767.6k
Bradley Kotush
Executive VP & CFO2.42yrsCA$873.01k0.10% CA$839.9k
Benjamin Katchen
Executive VP and Chief Digital & Strategy Officerno dataCA$838.88k0.021% CA$166.5k
Jill MacRae
Director of Investor Relationsno datano datano data
John Hong
Senior VPno datano data0.000050% CA$404.3
Mark Hemingway
General Counsel & Corporate Secretary1.67yrsno data0.0075% CA$60.7k
Amy Bruyea
Senior Vice President of Human Resources2.25yrsno data0.0046% CA$36.8k
Anthony Stilo
Senior Vice President of Internal Audit4.17yrsno data0.011% CA$90.6k
David J. Cluff
Executive VP of Enterprise Risk Management & Chief Risk Officer2.67yrsCA$727.70k0.011% CA$91.3k
James Pelletier
Senior Vice President of Commercial Real Estate Lendingno datano datano data

2.5yrs

Average Tenure

Experienced Management: HCG's management team is considered experienced (2.5 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Yousry Bissada
President2.58yrsCA$2.41m0.095% CA$767.6k
Paul Derksen
Independent Chairman of the Board1.83yrsCA$165.99k0.11% CA$916.2k
Claude Lamoureux
Independent Director2.83yrsCA$135.00k0.045% CA$366.5k
Alan Hibben
Independent Director2.83yrsCA$145.00k0.017% CA$140.5k
Paul Haggis
Independent Director2.83yrsCA$145.00k0.024% CA$190.1k
Sharon Sallows
Independent Director2.83yrsCA$135.00k0.0094% CA$76.3k
James Lisson
Independent Director2.83yrsCA$115.00k0.024% CA$190.8k
Robert Blowes
Non-Independent Director4.83yrsCA$115.00k0.013% CA$106.9k
Lisa Ritchie
Independent Director1.83yrsCA$72.03k0.011% CA$91.6k
Susan Hutchison
Independent Director1.42yrsCA$28.75k0.0019% CA$15.3k

2.8yrs

Average Tenure

67yo

Average Age

Experienced Board: HCG's board of directors are not considered experienced ( 2.8 years average tenure), which suggests a new board.


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: HCG insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Home Capital Group Inc.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Home Capital Group Inc.
  • Ticker: HCG
  • Exchange: TSX
  • Founded: 1977
  • Industry: Thrifts and Mortgage Finance
  • Sector: Banks
  • Market Cap: CA$808.645m
  • Shares outstanding: 52.96m
  • Website: https://www.homecapital.com

Number of Employees


Location

  • Home Capital Group Inc.
  • 145 King Street West
  • Suite 2300
  • Toronto
  • Ontario
  • M5H 1J8
  • Canada

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
HCGTSX (The Toronto Stock Exchange)YesCommon SharesCACADJan 1982
7HCDB (Deutsche Boerse AG)YesCommon SharesDEEURJan 1982
HMCB.FOTCPK (Pink Sheets LLC)YesCommon SharesUSUSDJan 1982

Biography

Home Capital Group Inc., through its subsidiary, Home Trust Company, provides residential and nonresidential mortgage lending, securitization of residential mortgage products, consumer lending, and credit card services in Canada. It offers deposits via brokers and financial planners, and under the Oaken Financial brand. The company also provides credit card and line of credit lending services, including Equityline Visa product, a home equity line of credit that is secured by residential property; and cash-secured and unsecured credit card products. In addition, it offers consumer retail lending services for durable household goods, such as water heaters and larger-ticket home improvement items; and consumer loans. Further, the company manages a treasury portfolio. The company operates through offices in Ontario, Alberta, British Columbia, Nova Scotia, Quebec, and Manitoba. Home Capital Group Inc. was founded in 1977 and is based in Toronto, Canada. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/03/31 01:48
End of Day Share Price2020/03/30 00:00
Earnings2019/12/31
Annual Earnings2019/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.