While many Americans will be gassing up to take their summer vacations across different parts of U.S., some drivers on the opposite side of the globe are just contented that they can even gain access to a car at all. While doing some research over the weekend, we stumbled across a penny stock, Earn-A-Car Inc. (EACR), which is in the business of getting South Africans with bad credit cars within 24 hours. Capitalizing on the niche market, it’s amazing there isn’t more attention spent on EACR stock and the $1 million EBITDA they just booked for the year ended February 28, 2013.
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EACR Stock Quote
Market Cap: 3.35M
Last (Jun 19): 0.0298 ▼ -0.0002 (-0.67%)
52Wk High: 0.075
52Wk Low: 0.014
Issued and Outstanding: 112,500,000
Graeme Hardie: 78,750,000 (70.0%)
14-Day Rel Strength: 53.06%
14-Day Stochastic: 98.75%
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Earn-A-Car is the brainchild of millionaire Graeme T. Hardie. Started back on July 2, 2005 as Easycars Rental and Sales (Pty) Ltd., the company has once focus: enter car rental agreements that allow the renter to return the car with one calendar months’ notice, but, at the same time, allow the renter to earn their car by providing customers with a cash back bonus on termination of the rental agreement for each month that the customer was in good standing with Earn-A-Car.
Nearly 50% of all credit rated South Africans are blacklisted at credit bureaus, an increase of nearly 27% over the last 4 years, and are consequentially unable to access typical car finance. Targeting these driver’s who have been “blacklisted,” the significant up-front administration fee Earn-A-Car charges have proven to be a deciding factor as to how the Company has been able to guarantee sufficient cash to allow their customer’s to buy the car they rent, or a similar car of their choice, at the end of approximately 4 years.
For the fiscal year ended February 28, 2013, Earn-A-Car booked car rental revenues of $3.478 million versus $2.187 million for the same period the year prior. The roughly 59% increase in revenues was significant enough to record a net income of $524,559 for the 12 months ended February 28, 2013 versus $60,792 for the same period the year prior.
Earn-A-Car reported revenue-earning vehicles worth $4,858,545 net as of February 28, 2013 and $2,982,060 net as of February 29, 2012. Taking the depreciation expense out of the equation (EBITDA) and the Company booked net income of $1,036,358 and $576,911 for the last 2 fiscal years. That’s pretty darn good if you ask any accountant or value investor.
When looking into EACR stock as a separate entity (since profitable companies are never attractive for penny stock traders), we can’t seem to understand why no action is happening on the Level 2 screens. NITE is boxed in on the bid/ask right now at 0.0298/0.026 whereas, from the looks of where Earn-A-Car is going, this should be crushing its 52Week high like a grape right now instead of sitting with a market capitalization less than fiscal 2012 revenues.
Is EACR dormant because it’s winter time in South Africa? Is it because no one knows about it or is promoting it? It sure isn’t because they aren’t making any money, just look at Graeme’s well-earned, luxurious diggs in Nutley, New Jersey (see here).
About EACR Stock
Earn-A-Car, Inc., together with our wholly-owned subsidiaries, is primarily engaged in the business of the rental of vehicles to retail customers on a monthly basis through its leased premises in Johannesburg, South Africa.
Click here to view the SEC filings for EACR.
Click here to view the website for Earn-A-Car.
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Finding sweet penny stocks like EACR is what makes doing your own research a “pleasure” as they say in South Africa. EACR stock is extremely undervalued and should be trading much more regularly than the chart displays. Hey, maybe if a couple of you readers find it interesting enough when you do your own research, you also might come to the same conclusion – that this is a gem of a Company.
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