With a lack of funding from the Paycheck Protection Program, many small businesses were forced to seek financing from alternative lenders. One such lender was OnDeck Capital, a New York based lending firm that has made over $1 billion in loans to small businesses across the state. Is Ondeck Stock a buy?
The coronavirus wreaked havoc on businesses, both big and small. In response OnDeck committed to assisting businesses and providing them with the financial resources they require to weather the storm. With the second-wave sweeping its way across the nation, OnDeck’s role is more crucial than ever.
OnDeck merges with Enova
On October 13, Enova, a financial analytics firm and small-business lender completed its acquisition of OnDeck. The deal was worth an estimated $122 million or $1.89 per share. OnDeck stock will now trade under Enova’s ticker symbol. The company has an estimated market capitalization of $108 million.
The merger of the two companies will create a stronger and more well-diversified brand. Enova, based in Chicago, is one of the premier financial lending firms in the U.S. With OnDeck under its wing, the company will be able to scale its operations with a stronger portfolio. OnDeck’s expertise in New York combined with Enova’s strong reputation will create a powerful synergy.
ONEOK (OKE) Ondeck Stock Stats:
|P/E Ratio (ttm)||17.19|
|Bid||17.36 x 200|
|Ask||17.38 x 200|
|Dividend & Yield||N/A|
The case for investing in OnDeck stock
A merger with Enova is great news for OnDeck stock as it gives the company access to a wider pool of clients. As a common entity, both companies had $4.7 in originations last year and have served more than 7 million customers.
The onset of the pandemic put many small business owners in a precarious position as they struggled to meet their expenses. With the PPP out of funds, alternative lenders played a huge role in providing financial assistance. This makes OnDeck (now under Enova) a crucial player in the corona-economy.
Along with Enova’s assistance, the lending firm will be able to serve small-businesses with greater cash flow potential and more diversity. Enova estimates, that the manpower of both companies will accelerate its earnings per share (EPS) by 40%. This is based on the opportunity for greater long-term success that both financial lenders can contribute to.
Amidst a volatile economy, an investment in OnDeck stock (now trading under Enova) is a wise choice. The company is well-positioned to ride out the crisis stronger than ever and provides a great opportunity for forward-looking investors.