MFIN - Medallion Financial rises after Q2 consensus beat but future does not look promising

Medallion Financial ( MFIN ) stocks rose by ~8% after the finance company reported a beat on a lower Y/Y consensus EPS estimates, but future does not look promising.

MFIN Q2 GAAP EPS of $0.54 beats by $0.32, and revenue of $46.24M (+24.1% Y/Y) beats by $8.86M.

The company that originates and services loans in various consumer and commercial industries said Q2 loan originations increased by 45% to $305.0M from $210.9M a year ago.

Return on average stockholders' equity stood at 18.1%.

The company had paid a cash dividend of $0.08 during the quarter, and repurchased 1,272,150 shares for a total of $10M.

The company announced in May, along with its Q1 results, that it replaced its existing stock repurchase program with a new $35M stock repurchase program. The move saw the stock prices go up temporarily.

Also, a partnership with the fintech firm, Covered Holdings, led to the share prices to rise. The prices, however, have continued to fall since then.

MFIN stocks have lost ~21% of value in the last one year, particularly after the U.S. Securities and Exchange Commission filed a complaint against the company and its President Andrew Murstein for illegally engaging in two schemes to reverse the company's sinking stock price.

Currently, the levered free cash flow margin for the company is -126.82%, against the financials sector median of 19.28%.

MFIN has characteristics that have been historically associated with poor future stock performance, and Seeking Alpha's Quant rating system gives the stocks a Sell rating.

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