TSX:HCG

Stock Analysis Report

Home Capital Group

Executive Summary

Home Capital Group Inc., through its subsidiary, Home Trust Company, provides deposit, mortgage lending, retail credit, and credit card issuing services in Canada.


Snowflake Analysis

Good value 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 has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-1.0%

HCG

1.0%

CA Mortgage

1.5%

CA Market


1 Year Return

99.4%

HCG

39.9%

CA Mortgage

9.8%

CA Market

Return vs Industry: HCG exceeded the Canadian Mortgage industry which returned 40.2% over the past year.

Return vs Market: HCG exceeded the Canadian Market which returned 10.4% over the past year.


Shareholder returns

HCGIndustryMarket
7 Day-1.0%1.0%1.5%
30 Day1.3%3.4%2.4%
90 Day23.2%10.9%6.2%
1 Year99.4%99.4%51.2%39.9%13.4%9.8%
3 Year12.6%11.5%68.6%46.3%17.7%7.0%
5 Year-17.7%-23.0%67.8%37.1%36.5%16.4%

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?

38.4%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: HCG (CA$34.66) is trading below our estimate of fair value (CA$54.13)

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


Price To Earnings Ratio

PE vs Industry: HCG is poor value based on its PE Ratio (16.6x) compared to the Mortgage industry average (12.9x).

PE vs Market: HCG is poor value based on its PE Ratio (16.6x) compared to the Canadian market (15.8x).


Price to Earnings Growth Ratio

PEG Ratio: HCG is good value based on its PEG Ratio (0.9x)


Price to Book Ratio

PB vs Industry: HCG is good value based on its PB Ratio (1.2x) compared to the CA Mortgage industry average (1.2x).


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?

17.6%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: HCG's forecast earnings growth (17.6% per year) is above the savings rate (1.4%).

Earnings vs Market: HCG's earnings (17.6% per year) are forecast to grow faster than the Canadian market (10.3% per year).

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

Revenue vs Market: HCG's revenue (9.7% per year) is forecast to grow faster than the Canadian market (5% per year).

High Growth Revenue: HCG's revenue (9.7% 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 (11.2%).


Next Steps

Past Performance

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

-28.6%

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 (32%) are higher than last year (31.8%).


Past Earnings Growth Analysis

Earnings Trend: HCG's earnings have declined by -28.6% per year over the past 5 years.

Accelerating Growth: HCG's earnings growth over the past year (5.6%) exceeds its 5-year average (-28.6% per year).

Earnings vs Industry: HCG earnings growth over the past year (5.6%) underperformed the Mortgage industry 10.3%.


Return on Equity

High ROE: HCG's Return on Equity (8.2%) is considered low.


Return on Assets


Return on Capital Employed


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 0.3x 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 (0.64%)


Next Steps

Dividend

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

1.41%

Forecast Dividend Yield


Dividend Yield vs Market

company0%marketbottom25%1.9%markettop25%5.4%industryaverage9.5%forecastin3Years1.4%

Current dividend yield vs market & industry

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

What is the CEO of Home Capital Group's salary, the management and board of directors tenure and is there insider trading?

2.3yrs

Average management tenure


CEO

Yousry Bissada (59yo)

2.4yrs

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 ($USD1.85M) is about average for companies of similar size in the Canadian market ($USD2.17M).

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


Management Age and Tenure

2.3yrs

Average Tenure

Experienced Management: HCG's management team is considered experienced (2.3 years average tenure).


Board Age and Tenure

2.7yrs

Average Tenure

67yo

Average Age

Experienced Board: HCG's board of directors are not considered experienced ( 2.7 years average tenure), which suggests a new board.


Insider Trading

Insider Buying: HCG insiders have only sold shares in the past 3 months.


Recent Insider Transactions

SellCA$4,280,33120 Nov 19
Sheng Chung
EntityIndividual
Shares122,000
Max PriceCA$35.39
SellCA$7,962,74619 Nov 19
Sheng Chung
EntityIndividual
Shares230,000
Max PriceCA$34.99
SellCA$199,06027 Sep 19
Dinah Henderson
EntityIndividual
Shares8,000
Max PriceCA$25.00
SellCA$10026 Aug 19
Dinah Henderson
EntityIndividual
Shares4
Max PriceCA$24.99
BuyCA$125,35013 Aug 19
Bradley Kotush
EntityIndividual
Role
Chief Financial Officer
Executive VP & CFO
Shares5,000
Max PriceCA$25.07
BuyCA$880,81903 Jun 19
Sheng Chung
EntityIndividual
Shares49,300
Max PriceCA$17.96
BuyCA$1,233,25524 May 19
Sheng Chung
EntityIndividual
Shares66,800
Max PriceCA$18.51
BuyCA$2,553,56011 May 19
Sheng Chung
EntityIndividual
Shares144,700
Max PriceCA$18.10
BuyCA$6,82810 May 19
Sheng Chung
EntityIndividual
Shares400
Max PriceCA$17.07

Ownership Breakdown

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


Management Team

  • Yousry Bissada (59yo)

    President

    • Tenure: 2.4yrs
    • Compensation: CA$2.41m
  • Anthony Stilo

    Senior Vice President of Internal Audit

    • Tenure: 4yrs
  • Brad Kotush

    Executive VP & CFO

    • Tenure: 2.3yrs
    • Compensation: CA$873.01k
  • Ed Karthaus (60yo)

    Executive Vice President of Sales & Marketing

    • Tenure: 2.3yrs
  • John Hong

    Senior VP

    • Benjy Katchen

      Executive VP and Chief Digital & Strategy Officer

      • Compensation: CA$838.88k
    • Laura Lepore

      Assistant Vice President

      • Victor DiRisio

        Chief Information Officer

        • Tenure: 2yrs
        • Compensation: CA$739.15k
      • Amy Bruyea

        Senior Vice President of Human Resources

        • Tenure: 2.2yrs
      • Mark Hemingway

        General Counsel & Corporate Secretary

        • Tenure: 1.5yrs

      Board Members

      • Paul Derksen (68yo)

        Independent Chairman of the Board

        • Tenure: 1.7yrs
        • Compensation: CA$165.99k
      • Claude Lamoureux (76yo)

        Independent Director

        • Tenure: 2.7yrs
        • Compensation: CA$135.00k
      • Alan Hibben (66yo)

        Independent Director

        • Tenure: 2.7yrs
        • Compensation: CA$145.00k
      • Paul Haggis (67yo)

        Independent Director

        • Tenure: 2.7yrs
        • Compensation: CA$145.00k
      • Yousry Bissada (59yo)

        President

        • Tenure: 2.4yrs
        • Compensation: CA$2.41m
      • Sharon Sallows (70yo)

        Independent Director

        • Tenure: 2.7yrs
        • Compensation: CA$135.00k
      • Jim Lisson (68yo)

        Independent Director

        • Tenure: 2.7yrs
        • Compensation: CA$115.00k
      • Bob Blowes (66yo)

        Non-Independent Director

        • Tenure: 4.7yrs
        • Compensation: CA$115.00k
      • Lisa Ritchie (60yo)

        Independent Director

        • Tenure: 1.7yrs
        • Compensation: CA$72.03k
      • Sue Hutchison

        Independent Director

        • Tenure: 1.3yrs
        • Compensation: CA$28.75k

      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: 1986
      • Industry: Thrifts and Mortgage Finance
      • Sector: Banks
      • Market Cap: CA$1.763b
      • Shares outstanding: 52.95m
      • 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 deposit, mortgage lending, retail credit, and credit card issuing services in Canada. It offers various deposit products, such as savings accounts; and single-family residential and insured residential lending, as well as residential and non-residential commercial mortgage lending services. 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. Additionally, it offers deposits through brokers and financial planners, as well as through its direct to consumer deposit brand, Oaken Financial. The company operates through offices in Ontario, Alberta, British Columbia, Nova Scotia, Quebec, and Manitoba. Home Capital Group Inc. was founded in 1986 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 Analysis2020/01/19 23:37
      End of Day Share Price2020/01/17 00:00
      Earnings2019/09/30
      Annual Earnings2018/12/31


      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.