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ECN Capital Stock: Should You Buy the Dip?

ECN Capital (TSX:ECN) is a Toronto-based company that originates, manages, and advises on prime consumer credit portfolios in North America. Shares of this TSX stock have dropped 39% in 2022 as of close on November 15. The stock has plummeted 70% in the year-over-year period.

The North American consumer credit industry has faced major challenges in the form of an aggressive interest rate tightening policy from the United States Federal Reserve and the Bank of Canada (BoC). Credit growth has already taken a hit, but lenders should also see profit margins significantly improve in this environment. That should give investors pause as this TSX stock has been hit hard by volatility.

This company released its third quarter fiscal 2022 results on November 9. It reported adjusted net income of $11.8 million or $0.05 per share – up from $11.3 million or $0.03 per share in the previous year. In the quarter, CEO Steve Hudson praised its performance in the third quarter on the back of strong consumer demand in its manufactured housing and marine & RV segments. ECN Capital reported originations of $679 million compared to $613 million in the third quarter of fiscal 2021.

Shares of this TSX stock currently possess a very favourable price-to-earnings ratio of 0.6. Meanwhile, the stock possesses a Relative Strength Index (RSI) of 28 at the time of this writing. That puts ECN Capital in technically oversold territory. ECN Capital last paid out a quarterly dividend of $0.01 per share. That represents a modest 1.2% yield.