Equipment finance stocks experienced double-digit growth over the past year as improving inflation and the strong possibility of interest rate cuts created opportunities for lenders with growth capital.
Equipment finance lender stocks increased 20.2% year over year, landing at an index value of 441.33 on July 15, according to Equipment Finance News’ Industry Stock Index. And over the last month, the index value increased 6%.
Equipment lenders also seek to consolidate and combine resources, to better support commercial clients, grow and succeed, Orrstown Bank Chief Executive and President Thomas R. Quinn Jr. previously told EFN, following the merger of Shippensburg, Pa.–based Orrstown Financial Services and York, Pa.-based Codorus Valley Bancorp.
EFN developed the index from the pricing of about 20 publicly traded companies in the sector. The index offers a valuable barometer for investor perceptions of the equipment finance industry.
Wider equipment industry sees growth
While the equipment finance industry continues to grow, other segments such as the equipment-as-a-service (EaaS) industry are also expanding due to improving market conditions, Matthew Hudson, managing director and head of EaaS within global investment bank Houlihan Lokey’s Business Services Group, told EFN.
“The decline in the rate of inflation this year has slowed revenue and EBITDA growth trends at many EaaS companies, as you would naturally expect,” he said. “Investor confidence, however, remains strong as inflation begins to cool and interest rate cuts appear to be on the near-term horizon.”
With inflation cooling and interest rate cuts on the horizon, publicly traded companies and companies with access to capital expect to experience more growth, Hudson said.
“Performance from the larger players this year in the space is strongly indicative of projections showing a 3% to 4% market expansion this year,” he said. “Sentiment from executives reflects a view that businesses remain confident in their near-term growth plans as project demand remains stable.”
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