Medallion Financial Corp. (NASDAQ: TAXI), a specialty finance company with a leading position servicing the taxicab industry and other niche markets, announced that earnings, or net increase in net assets resulting from operations was $2,832,000 or $0.16 per diluted common share in the 2008 fourth quarter.
Medallion Financial Corp. is well positioned to profit from the taxi industry, which accounts for about half of all loans issued by the Medallion Financial Corp. Taxi Medallions are one of the few assets that have appreciated in value in 2008, increasing in every one of Medallion Financial Corp operating makets. And that trend has continued through the start of 2009. Prices in 2008 for corporate taxi medallions in New York City increased over 24% to an all-time high of $750,000 per corporate taxi medallion in March 2009.
The taxi industry has been somewhat insulated from the current economic conditions. During recessions and slow economic times the taxi industry sees an influx of manpower due to increased unemployment or people experiencing under employment, picking up taxi shifts is flexible and helps people meet there bills. Slower economic conditions leads to corporations using less limos and other car services and will turn to a medallion taxi.
Andrew Murstein, President of Medallion Financial Corp. stated, "We are very pleased with the year's results, especially given what has been a challenging environment for financial institutions. Underlying our performance is the collateral value we have in our medallion loans. In over 70 years of involvement in the medallion industry, we have experienced zero losses on any taxi medallion loan we have originated in New York City. In addition, our loan to value ratio on our entire medallion portfolio is now under 50%."
The New York City taxi industry is also well insulated from competition since it operates as a cartel with legal restrictions on entry. Sales of new medallions are rare and the current amount of yellow medallions in New York City is 13,150. Since January 2004 the price of a corporate taxi medallion is up 260%, versus the S&P which is down about 25%.
Medallion Financial Corp. (TAXI), is currently trading at $7.41 with a P/E of about 8.5% and dividend yield of 10% both of which are attractive. However TAXI over the last three weeks is up over 120% from its low of $3.15. An aggressive buy point for TAXI would be $6.25 which is a 32.8% Fibonacci retracement from the recent high and lows made in March. A more attractive entry point would be the $5.65-5.90 level a Fibonacci confluence zone, of the 2008 highs to March 2009 low and the more recent high and lows made in March. I would play TAXI as a long term play, with a nice dividend income.
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