World Acceptance swings to Q3 loss as loss provision rises

Overview

• Consumer finance firm's fiscal Q3 revenue grew 1.9% yr/yr

• Company reported a net loss of $0.9 mln, down from $13.4 mln profit last year

• Provision for credit losses increased due to growth in new customer loans

Outlook

• World Acceptance expects improved profitability as new customers gain tenure in the portfolio

• Company anticipates lower charge-offs and reserve rates in the next fiscal year

• World Acceptance plans a 3-5% reduction in headcount to optimize staffing

Result Drivers

• TARGETED PORTFOLIO GROWTH - Co resumed targeted growth strategy, increasing outstanding loans and customer base

• NEW CUSTOMER LOANS - Increased loan origination volume for new customers by 16.6%, necessitating higher provision for credit losses

• HIGHER CREDIT QUALITY - Co targeted high credit quality new customers, increasing new customer percentage in portfolio

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "hold" and the breakdown of recommendations is no "strong buy" or "buy", 2 "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the consumer lending peer group is "buy."

• Wall Street's median 12-month price target for World Acceptance Corp is $156.00, about 9.4% above its January 26 closing price of $142.58

Press Release: ID:nBw2PqcK9a

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