There are several dimensions to consider:
- market saturation (harder to expand when markets are saturated)
- cost of acquiring new customers
- method used to acquire new customers (some methods depend on paying other agents to attract people and those new customers may not be as "sticky" as those acquired by other methods)
- the amount and quality of customer data acquired through the selling and retention process (detailed information of this nature is invaluable)
The following post outlines this in more detail - also provides leads to sources of more information:
This is one of the reasons why I like Input Capital, a crew member of the Financial Log Book. In recent weeks, its price has dropped significantly for two reasons:
- depressed commodity prices
- difficulties in moving crops due to capacity issues in the Canadian rail system.
Also, read this account of a recent court case about a farmer who did not deliver on a streaming contract:
My sense is that Input will alter its business practices as it has in the past. I tend to regard the statement by Tony Mechant, the farmer's lawyer for what it is - a proclamation by a person whose business depends on promoting class action cases ... and there have been many of them. Use Google to find things like:
http://www.canadianlawyermag.com/legalfeeds/author/glenn-kauth/tony-merchant-appealing-three-month-suspension-media-report-4606/
https://www.macleans.ca/news/canada/white-mans-windfall-a-profile-of-tony-merchant/
I reviewed comments about the court case on a few discussion boards in the farming community and the general sense is that there is little sympathy for the plaintiff who seemingly either did not read the contract or when he found himself unable to meet the conditions of the agreement, tried to take the legal route to avoid his obligations. There were other takes as well.
Note: With new companies, I tend to ignore quarterly financial reports. There have been some disappointing financials in the most recent report but nothing, in my opinion, to worry about ... unless the trend persists. It can pay to tolerate fluctuations in a company's early going. It is a normal part of business development. The path to success is never without issues.
Things will change. In my view, the present pricing of Input's stock represents a potential entry point and/or an opportunity to add to one's holdings. I have increased my position.
http://www.canadianlawyermag.com/legalfeeds/author/glenn-kauth/tony-merchant-appealing-three-month-suspension-media-report-4606/
https://www.macleans.ca/news/canada/white-mans-windfall-a-profile-of-tony-merchant/
I reviewed comments about the court case on a few discussion boards in the farming community and the general sense is that there is little sympathy for the plaintiff who seemingly either did not read the contract or when he found himself unable to meet the conditions of the agreement, tried to take the legal route to avoid his obligations. There were other takes as well.
Note: With new companies, I tend to ignore quarterly financial reports. There have been some disappointing financials in the most recent report but nothing, in my opinion, to worry about ... unless the trend persists. It can pay to tolerate fluctuations in a company's early going. It is a normal part of business development. The path to success is never without issues.
Things will change. In my view, the present pricing of Input's stock represents a potential entry point and/or an opportunity to add to one's holdings. I have increased my position.
One of things I will monitor is customer retention. That will tell me about the acceptance of streaming in the farming community. Word of mouth is extremely important in these communities. Also, repeat customers will reduce the costs of operation for Input. I will also monitor the number and value of financing deals.
The following interview is well worth reading as it provides information not readily available in the company's canned presentations:
https://ceo.ca/@Newton/7800-words-with-brad-farquhar-input-capital-inp
The company has proven its ability to learn and adjust to changing conditions. I like this attribute - also the fact that the company has no debt.
Check this out - the company now offers mortgage streaming as a source of cash for farmers:
The Mortgage Stream
In the longer run, this may prove more successful than the canola streaming contracts which are expensive for farmers. Land prices have increased significantly. Many farmers are planning exit strategies (i.e. selling their farms to fund their retirements) which do not involve children taking over their farms. In a sense, the mortgage streams are akin to reverse mortgages. Can Input compete with the banks in this regard? Time will tell.
Check this out - the company now offers mortgage streaming as a source of cash for farmers:
The Mortgage Stream
In the longer run, this may prove more successful than the canola streaming contracts which are expensive for farmers. Land prices have increased significantly. Many farmers are planning exit strategies (i.e. selling their farms to fund their retirements) which do not involve children taking over their farms. In a sense, the mortgage streams are akin to reverse mortgages. Can Input compete with the banks in this regard? Time will tell.
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