The last four years haven't been easy for shareholders of FlexiGroup Limited (ASX: FXL). Falling profits and write-downs on exited businesses have all weighed heavily on its share price.
During that time its shares have fallen down by a third, but at long last I believe the consumer leasing company is showing signs of improvement.
In November management revealed that its core business has started FY 2017 well and the company is on course to deliver full year cash net profit after tax of between $90 million and $97 million after targeted growth investments.
These strategic investments include growing its Ireland-based business, Commercial Lease segment, and its new product Oxipay.
Oxipay is a similar product to Afterpay Holdings Ltd (ASX: AFY) and zipMoney Ltd (ASX: ZML) in allowing consumers to make purchases in-store or online and spread the payment over four instalments with zero interest.
The company sees it as a strategic opportunity within its existing network, as well as a gateway to a new, broader range of retailers. Competition in the industry is fierce, but FlexiGroup certainly has the financial clout to make a go of it.
If the company delivers on its cash profit forecast then I would expect to see its dividend at least hold firm at 14.5 cents per share, which equates to a fully franked 6% yield. This yield is far greater than the market average of 4.1% and even beats three of the big four banks.
But should you invest?
With a solid start to FY 2017 and its shares changing hands at just 11x trailing earnings on a 6% dividend, FlexiGroup does look to be great value right now.
But with its half-year results just over a month away, I would suggest investors hold off an investment until then. Whilst I expect a solid half-year result, I feel it is best to be cautious considering its mixed performance in the last few years.
