Medallion Financial Corp (NASDAQ: MFIN)

Sector: Financial Services Industry: Credit Services CIK: 0001000209
Market Cap 245.02 Mn
P/B 0.62
P/E 5.98
P/S 1.55
ROIC (Qtr) 7.37
Div Yield % 5.36
Rev 1y % (Qtr) 21.12
Total Debt (Qtr) 299.41 Mn
Debt/Equity (Qtr) 0.75

About

Price action

Investment thesis

Bull case

  • Strong operating cash flow of 120.88M provides robust 0.40x coverage of total debt 299.41M, indicating excellent debt servicing capability and financial flexibility.
  • Operating cash flow of 120.88M provides strong 18.57x coverage of stock compensation 6.51M, indicating sustainable incentive practices.
  • Strong tangible asset base of 2.73B provides 9.12x coverage of total debt 299.41M, indicating robust asset backing and low credit risk.
  • Strong operating cash flow of 120.88M provides 2.76x coverage of SG&A expenses 43.86M, showing efficient operational cost management.
  • Cash position of 150.98M provides exceptional 13.16x coverage of minority interest expenses 11.47M, indicating strong liquidity.

Bear case

  • Operating cash flow of 120.88M barely covers its investment activities of (127.84M), with a coverage ratio of -0.95, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 120.88M provides thin coverage of dividend payments of (10.71M) with a -11.29 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Free cash flow of 120.88M represents just -3.28x of debt issuance (36.84M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Operating cash flow of 120.88M is outpaced by equity issuance of (404000) (-299.21 ratio), indicating concerning reliance on equity markets for funding operations.
  • Retained earnings of 152.97M provide limited buffer against comprehensive income items of (2.42M), which is -63.31x, indicating elevated exposure to market risks.

Peer comparison

Companies in the Credit Services
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 V Visa Inc. 685.45 Bn 34.17 17.14 25.17 Bn
2 MA Mastercard Inc 520.38 Bn 36.52 16.53 18.98 Bn
3 AXP American Express Co 266.36 Bn 25.27 4.08 59.23 Bn
4 COF Capital One Financial Corp 111.93 Bn 102.41 3.87 51.48 Bn
5 PYPL PayPal Holdings, Inc. 58.35 Bn 11.87 1.78 11.28 Bn
6 SYF Synchrony Financial 32.00 Bn 9.16 3.32 14.43 Bn
7 SOFI SoFi Technologies, Inc. 29.56 Bn 46.17 8.90 2.81 Bn
8 ALLY Ally Financial Inc. 14.44 Bn 52.52 1.83 20.63 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.13 1.03
EV to Cash from Ops. EV/CFO 3.17 4.72
EV to Debt EV to Debt 1.28 2.99
EV to EBIT EV/EBIT 5.80 -246.63
EV to EBITDA EV/EBITDA 3.95 -62.30
EV to Free Cash Flow [EV/FCF] EV/FCF 3.17 7.33
EV to Market Cap EV to Market Cap 1.57 10.21
EV to Revenue EV/Rev 2.43 10.01
Price to Book Value [P/B] P/B 0.62 3.47
Price to Earnings [P/E] P/E 5.98 13.86
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 3.83 1.59
Dividend Payout Ratio % Div Payout % (Qtr) 25.40 2.22
Dividend per Basic Share Div per Share (Qtr) 0.46 0.68
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 8.70 4.82
Interest Coverage Interest Coverage 0.00 -64.96
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 0.00 -85.80
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -19.66 7.91
Dividend Growth (1y) % Div 1y % (Qtr) 15.00 5.47
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 2.33 16.85
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 17.39 -0.69
EBIT Growth (1y) % EBIT 1y % (Qtr) 9.25 33.67
EBT Growth (1y) % EBT 1y % (Qtr) 9.25 1.73
EPS Growth (1y) % EPS 1y % (Qtr) 2.26 -64.54
FCF Growth (1y) % FCF 1y % (Qtr) 16.08 129.37
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 10.46 18.73
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.05 0.23
Cash Payout Ratio Cash Payout (Qtr) 0.09 0.05
Cash Ratio Cash Ratio 0.00 0.46
Current Ratio Current Ratio 0.00 1.05
Debt to Equity Ratio Debt/Equity (Qtr) 0.75 4.88
Interest Cover Ratio Interest Cover Ratio 0.00 -64.96
Times Interest Earned Times Interest Earned 0.00 -64.96
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 47.10 -17.83
EBIT Margin % EBIT Margin % (Qtr) 41.92 125.65
EBT Margin % EBT Margin % (Qtr) 41.92 -9.92
Gross Margin % Gross Margin % (Qtr) 100.00 72.34
Net Profit Margin % Net Margin % (Qtr) 26.00 -23.76