Shares of financial services company goeasy (TSX:GSY) have gained over 81% over the past year, outperforming the S&P/TSX Composite Index's gain of 24% during the same period. Further, goeasy stock has grown at a compound annual growth rate (CAGR) of about 30% in the past five years, delivering an above-average capital gain of 272%.

This solid appreciation in goeasy stock is led by its solid fundamentals and ability to consistently produce solid loan growth and stable credit performance.

goeasy is the leader in Canada's non-prime consumer credit market. The company operates over 400 retail stores and branches across Canada, with a robust digital lending platform. In addition, goeasy has partnerships with more than 9,500 dealers and merchants, allowing it to expand its reach and consumer loan portfolio further. However, as goeasy stock has gained substantially in value, let's explore whether investors should buy, sell, or hold goeasy stock.

goeasy's growth could push the stock higher

goeasy's business consistently generates superior growth. For instance, between 2013 and 2023, goeasy's revenue increased at a CAGR of 19%. Impressively, its adjusted earnings per share (EPS) recorded even higher growth, achieving a CAGR of 28.6% over the same period.

The momentum has only accelerated in 2024, with goeasy reporting record revenues of $735 million for the first half of the year, marking a 25% increase year-over-year. Thanks to its higher revenue, its adjusted EPS climbed 24% year-over-year. Such strong financial results show goeasy's strong market position and operational efficiency.

Thanks to its solid EPS growth rate, goeasy has consistently rewarded its shareholders with higher dividend payments. Notably, it has paid dividends for 20 years and uninterruptedly increased it for 10 consecutive years.

The momentum in goeasy's business will likely sustain given the acceleration in demand. As a top player in Canada's subprime lending sector, goeasy is well-positioned to capitalize on a large addressable market. The company's multi-product strategy is shifting its product mix toward lower-risk products, such as secured loans. Further, its omnichannel distribution strategy, expanding geographic footprint, and lower-cost funding sources provide a solid foundation for future growth.

While goeasy is likely to deliver solid sales growth, the company's focus on generating operating leverage through scale and productivity gains will improve the efficiency ratio. This will cushion its bottom line, drive its share price, and support higher dividend payments.

goeasy stock looks attractive on valuation

goeasy stock has gained substantially in value. However, considering its solid growth rate, GSY stock still looks attractive on the valuation front. For example, this Canadian stock trades at the next 12-month price-to-earnings multiple of 9.6, which looks compelling due to its double-digit EPS growth potential and current dividend yield of 2.6%.

Conclusion

With its strong fundamentals, attractive valuation, and robust growth potential, goeasy stock is a buy right now. The company is well-positioned to benefit from the growing non-prime lending market while its focus on lower-risk products could drive long-term growth. Further, the company's consistent earnings growth and solid dividend payment history make it a reliable option for income investors.