Mogo Inc (NASDAQ: MOGO) is making a run for the top in the market this morning, and for good reason. The company released its preliminary financial results, with EBITDA and cash flow blowing away expectations. At the same time, debt has been restructured, greatly reducing interest cost. Here’s what’s going on:
Stop wasting your time! Start finding winning trades in minutes with Trade Ideas!
MOGO Stock Heads Up On Preliminary Financial Results
As mentioned above, Mogo released its preliminary financial results for the third quarter, ending September 30, 2020. The company also announced amendments to its non-convertible debentures.
In terms of financial data, it is expected that in the third quarter, the company will report revenue in the amount of between $9.5 and $9.7 million. If that’s the case, revenue will fall right in line with expectations.
In terms of EBITDA, MOGO is expecting to report between $3.8 and $4.2 million, more than double analyst expectations. At the same time, positive cash flow net of investing activities is expected to come in between $4 million and $4.5 million, well ahead of consensus estimates.
To add icing to the cake, MOGO has made big moves in the conversion of debt. In fact, as a result of their efforts in the third quarter, they’ve cut the interest they pay nearly in half and greatly extended maturity dates, further strengthening the financial foundation on which it sits.
In a statement, Greg Feller, President and CFO at MOGO, had the following to offer:
Building on the record Adjusted EBITDA and cash flow in the second quarter, our third-quarter results continue to highlight the underlying profitability of our financial model as we transition back into growth. We continue to see an acceleration in the shift to digital financial services in Canada and we believe Mogo’s focus on solutions that help consumers manage their financial health and live a more sustainable lifestyle, uniquely position us to capitalize on this shift. With the recent launch of our new spending account and the upcoming launch of our peer-to-peer solution, we have a strong foundation for growth heading into 2021.
This News Is Significant
In the second quarter, MOGO made a dramatic swing to positive cash flow. However, the market didn’t seem to have a major reaction; even though the swing to positive cash flow happened at the climax of the COVID-19 pandemic, one of the most challenging environments in history for the finance industry.
Nonetheless, the market reaction seemed to be minimized by fears that the swing to positive cash flow was not sustainable. Nonetheless, Mogo has shown with this preliminary financial report that it is capable of not only sustaining the strong performance, but building upon it and producing even better results quarter over quarter.
Analyst Opinions
Analysts have a positive view of MOGO stock as well. In fact, shortly after the release of the preliminary results, the following analysts weighed in:
- Eight Capital. Eight Capital reiterated its Buy rating with a C$5 price target, citing a stronger financial position and responsible growth plan.
- Raymond James. Raymond James also reiterated its positive rating with a price target of $4. The analyst pointed to positive balance sheet changes and accelerated member growth as reasons to be excited.
The Bottom LIne
The bottom line here is simple, MOGO’s continued efforts to restructure debt and expand profitability are paying off. As a result, the company is growing stronger on a quarterly basis.
At the same time, we’re seeing a shift to digital finance across Canada. With Mogo’s services and ability to capture the Canadian audience, it is quickly becoming the Square Cash App of Canada, and has the potential to see tremendous growth like Square did as the Cash App became popular.
With continued positive financial results, analysts sharing positive opinions, and consumer adoption at levels that are hard to ignore, MOGO stock is one to watch closely.
Stop wasting your time! Start finding winning trades in minutes with Trade Ideas!
Join our free mailing list below to receive real-time news alerts.
Disclosure – CNA Finance and Alpha Stock News are not a financial advisor or broker/dealer. CNA Finance has a financial relationship with MOGO.