Seeking Alpha: Marlin Business Services Offers Good Growth, But Less Value

Equipment leasing can be a lucrative business, as it allows companies that have access to large pools of attractively-priced of capital to earn strong yields from lessees that lack the same level of access to capital or simply don't wish to deploy it that way. In contrast to large leasing enterprises like General Electric's (GE) GE Capital and CIT Group (CIT) or bank leasing operations like those at Bank of America (BAC) and Wells Fargo (WFC), Marlin Business Services (MRLN) is focused on small-ticket and micro-ticket leasing to smaller businesses on a nationwide business.

Although there are few relevant comps to this business, I argue that Marlin is a pretty well-run leasing company. Returns, margins, and credit metrics have rebounded strongly from the 2008/2009 lows, as have the shares. What's more, I believe the company can benefit from the "reinvestment" of profits into an expanded sales force, consistent low-cost funding from its captive bank, and it's quality service offerings to an underserved market. On the other hand, it is difficult to stretch the expected return models enough to generate a truly attractive fair value at these levels.

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Marlin Business Services Offers Good Growth, But Less Value