Company Description
Medallion Financial Corp. is a specialty finance company with a
leading position in the origination and servicing of loans
financing the purchase of taxicab medallions and related assets.
The Company also originates and services commercial loans
financing small businesses in other targeted industries, and
operates the largest taxicab rooftop advertising business in the
world. The Company and its subsidiaries have lent over $1 billion
to the taxicab and commercial equipment industries.
[Source: Company Press Release]
Reasons to Invest:
Well, well, 2004 is underway and we're aimed at starting the New Year off with profits. This week's DRIP of the Week is fundamentally sound as well as affordable.
Medallion Financial Corp. (NASDAQ:TAXI) is this week's Drip of
the Week. TAXI traded as low as $3.18 last March, and since then
it has been on the up and out. The 52-week change for TAXI is
143.33 percent and in relation to S&P 500, the 52-week change is
92.54 percent. Three days ago the stock set a new 52-week high
of 9.50.
Medallion Financial Corp. has a profit margin of 9.10 percent
which is excellent when you consider that their revenue growth
was -8.60 percent over the past few quarters. The company has
sported an annual growth rate of 17% since 1996.
TAXI announced that their net investment income (before taxes)
more than doubled in the third quarter (03), to 696,000 or $0.04
per share, which is up from 312,000 or $0.02 per share in the
second quarter of 2003. Their net income rose to $1,111,000 or
$0.06 per share, up from $755,000 or $0.04 per share in the
second quarter, and changed from a loss of $8,384,000 or $0.46
per share in the 2002 third quarter. The third quarter of 2003,
was the most profitable quarter out of the past eight quarters
for TAXI. In a news release, TAXI's president Andrew Murstein
noted that TAXI has "shown continued increases in both assets and
profitability in each and every subsequent quarter [in reference
to the past eight quarter]."
Mr. Murstein went on to note, "We are also pleased to announce
that the Board of Directors has approved the first ever stock buy
back in the history of the Company. The Company has empowered
the Company, in its discretion, to repurchase up to $10,000,000
of its outstanding common stock from time-to-time. Pursuant to
relevant requirements, the Company, should it pursue this
program, will send out notices to our shareholders of record
indicating our intention to repurchase shares, and then start the
program shortly thereafter." This quote posed me with a
question. There are two things that I am curious about. One, if
the company is starting its first ever stock buy back program
this could mean that the company seriously does see a great
growth outlook and therefore would like the opportunity to buy as
many shares as possible in order to catch the hike up. Or two,
the company is saying this in hopes to attract new buyers to the
stock and make them feel that this is the case. I however
believe that the company has been around for more than sixty
years (however, they went public in 96) and that is reason enough
to make me believe that the heads of TAXI are not planning on
dumping the stock any time soon.
Last October TAXI was granted approval by the FDIC for Federal
insurance for it's subsidiary, Medallion Bank. Medallion Bank
would provide an excellent platform to grow two of TAXI's most
profitable lending areas, taxicab medallion lending and asset-
based lending. This also allows TAXI the benefit of accepting
FDIC-insured deposits, of which will greatly lower their cost of
funds. This should prove to reduce their borrowing costs and
increase their margins.
TAXI yields a 2.11 percent dividend, which tallies out to $0.20
per share per year. The payout ratio on their dividend is 29.20
percent. This quarterly dividend of $0.05 might not be anything
to write home about, but when you consider the stock is trading
under $10.00 it makes a world of a difference. The closing price
on TAXI as of January 2nd, 2004 was 9.25. Thus, making ownership
of one contract of TAXI less than a thousand dollars.
TAXI is ranked right in the middle of industry over the past
year, and has been improving with each passing week. On top of
that, TAXI is about to record their first positive earnings year
in three years. What I mean by this, is that in 2001 their EPS
was -0.24. In 2002 their EPS was -0.69. The company has
reported positive earnings for all of 2003 and tends to build
upon this throughout 2004. While their total EPS for 2003 has
not yet been announced, the company has reported 0.12 EPS for the
first three quarters, and are estimating an year end EPS of 0.17.
That is quite a difference when you calculate last years -0.69
EPS.
This ends another exciting episode of the DripAdvisor.com Drip of
the Week. Stay tuned next week, as we will spotlight another
stock worthy of the DripAdvisor.com limelight.
Until Next Week,
Nich Sheldon
Editor
Broker Recommendations
Strong Buy 1
Buy 1
Hold 0
Sell 0
Strong Sell 0
Brokers Covering 2
DRIP Information:
Shares to Qualify = 1
Auto-reinvestment = No
Accept Foreign Accounts: Yes
Temper Enrollment: Yes
Min/Max Investment = $5,000/Quarter
Reinvestment Fees -
Dividend investment fees: 0
Cash investment fees: 0
Auto reinvestment fees: None
Transfer Agent:
American Stock Transfer
800-278-4353
Corporate Headquarters:
437 Madison Avenue
New York, NY 10022
Phone: (212) 328-2100
15) 226-2323
