Please ensure Javascript is enabled for purposes of website accessibility

Here's Why On Deck Capital Is Up More Than 30% Today

By Matthew Frankel, CFP® – Updated Nov 6, 2018 at 4:05PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The lender reported a strong quarter, and investors are very happy with the results.

What happened

Online small business lender On Deck Capital (ONDK) reported its third-quarter earnings, and it seems that investors were very happy with the results. As of 3:20 p.m. EST on Tuesday, the stock was up by a staggering 32%.

On Deck beat earnings expectations on both the top and bottom lines. Adjusted earnings of $0.17 per share were well ahead of the $0.11 that analysts had been calling for, and revenue of $103 million came in nearly $5 million higher than the consensus. It's also worth pointing out that this follows another big earnings beat in the second quarter.

Perhaps more importantly, the company increased its full-year guidance for both revenue and net income after the quarter's impressive numbers.

Loan application with approved stamped in red.

Image source: Getty Images.

So what

On Deck saw record loan origination volume for the quarter and was able to improve its profit margins without sacrificing its loan quality. The company reached a major milestone during the quarter, exceeding $10 billion in total loans originated. And, CEO Noah Breslow said that the company plans to announce a new lending product before the end of the year.

Now what

On Deck Capital is a business that is fueled by strong economic conditions and a favorable environment for small business. As long as those two things remain, the company could continue to grow impressively and pleasantly surprise investors. However, if a recession arrives earlier than experts are calling for, or if the regulatory environment becomes less friendly in the future, investors should be aware that these could be particularly negative catalysts.

For the time being, though, On Deck Capital certainly appears to be firing on all cylinders, and with such surprisingly strong numbers, today's upward move appears to be well-justified.

Matthew Frankel, CFP, has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

On Deck Capital, Inc. Stock Quote
On Deck Capital, Inc.
ONDK

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
327%
 
S&P 500 Returns
105%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.