GEO Investing

LOAN sequential revenue growthManhattan Bridge Capital (LOAN) is back on GeoInvesting’s radar as it has had several quarters of sequential revenue growth and earnings growth. We believe that there is further potential for the stock to maintain its upward track. We had originally tracked the company on March 6, 2013, at a time when the theme of sequential quarterly revenue growth was first noticed by our team:

“We’re adding LOAN to our New High Screen.  The company has consistently grown annual revenues from $1 million in 2009 to $1.4 million 2011, and is on track to report nearly $2 million in revenues in 2012.  Furthermore, the company has grown its revenues sequentially for seven straight Quarters.  EPS growth has not been as consistent, but we like the industry that the company participates in which should continue to get a lift from the type of loan environment caused by the 2008 recession.  Specifically,  “…the company provides short-term secured non-banking commercial loans to real estate investors (also known as hard money) to fund their acquisition and construction of properties located in New York Metropolitan area.” The company is also buying back shares and has just settled a legal dispute.  Selling below book value of $1.92, the company has only 4 million outstanding shares and a float of 1.7 million shares.  Investors should note that the company has only two full-time employees.”

Manhattan Bridge Capital is a New York-based real estate finance company that specializes in originating, servicing and managing a portfolio of first mortgage loans.  The company offers short-term, secured, non-banking loans (sometimes referred to as “hard money” loans) to real estate investors to fund their acquisition, renovation, rehabilitation or improvement of properties located in the New York metropolitan area.  LOAN intends to elect to be taxed as a real estate investment trust, or REIT, for U.S. federal income tax purposes beginning the year ended December 31, 2014.  In order to maintain its status as a REIT the company is required to distribute at least 90% of its taxable income to shareholders each year.

LOAN commenced business in 2007 and has posted outstanding financial and operating performances.  Remarkably, the company…[hide] has never foreclosed on a property and none of its loans have ever gone into default, although sometimes a loan may be renewed or the term of the loan extended to enable the borrower to avoid premature sale or refinancing of the property.  When loans are renewed or extended the company generally receives additional “points” and other fees.

LOAN Strong Financial Results, Sequential Revenue Growth

LOAN posted strong financial results for the year ended December 31, 2014, rounding out several quarters of sequential revenue growth.  Revenues grew to $2.9 million in 2014, 28.5% more than 2013 revenues.  More importantly, net income increased to around $1.5 million or $.29 per share a 150% increase over the $583,000 or $.14 per share recorded in 2013.

In December 2014 and March 2015, the Board approved dividends of $0.08 per common share.  The annualized dividend rate of $.32 implies a 7% yield based on the recent $4.50 share price.  LOAN therefore offers investors both outstanding growth and a dividend rate that is far greater than could be realized from alternative investments with similarly low risk profiles.

We will be watching for a break-out in LOAN and may look to pick up some shares at current prices.[/hide]

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