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Bull of the Day: On Deck Capital (ONDK)

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On Deck Capital recently beat the Zacks Consensus Estimate and it has seen estimates move higher ever since the beat.  That has pushed it to a Zacks Rank #1 (Strong Buy) and we take a look at how it got that way in this Bull of the Day article.


On Deck Capital, Inc. operates an online platform for small business lending in the United States, Canada, and Australia. It offers term loans and lines of credit. The company was incorporated in 2006 and is headquartered in New York, New York.

Most Recent Earnings Report

Back on November 6, ONDK posted a positive earnings surprise of 54% when the company reported earnings of $0.17 when $0.11 was expected.

This was the fourth consecutive beat of the Zacks Consensus Estimate but the 54% level was well below the recent average.  The previous three reports were all 100% or more!

Estimates Jump

Following the recent report, the Zacks Consensus Estimate for the current quarter jumped from $0.11 to $0.16.  That is a huge move.  

The Zacks Consensus Estimate for next quarter increased by a penny and the full year number for 2018 increased from $0.44 to $0.53.

The Zacks Consensus Estimate for next year also moved higher.  90 days ago the number was $0.46, but now it sits at $0.53 and looks to go higher.

Positive changes in the Zacks Consensus Estimate are the primary contributing factors for the Zacks Rank to move higher.


Right now I see  14x forward multiple on ONDK.  When compared to 23% top line growth, you see a big difference.  A 2x book multiple is pretty low and the 1.5xsales also is at an attractive level.

Over the last three quarters, margins have been improving.  Operating margin jumped from 0.78% in March to 3.18% in June and the September quarter shows a 6.84% number.

More revenue and higher margins mean that EPS will be growing.  Keep this up and the multiple will increase as well.


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