Personal lender World Acceptance's Q4 profit declines on higher expenses

Overview

• U.S. personal lender's fiscal Q4 revenue rose 7.4% yr/yr, net income and EPS fell

• Company's profitability pressured by higher personnel and share-based compensation expenses

• World Acceptance repurchased 5.9% of outstanding shares in the quarter

Outlook

• Company expects portfolio to deliver results in coming fiscal year as focus shifts to portfolio health

• Company anticipates lower charge-offs, reduced reserve rates, and improved profitability as customer base matures

Result Drivers

• PORTFOLIO GROWTH - Co shifted from conservative underwriting to targeted portfolio growth, resulting in a 4.4% yr/yr increase in gross loans outstanding and a 2.5% increase in customer base

• HIGHER EXPENSES - General and administrative expenses, especially personnel and share-based compensation, rose sharply and weighed on profitability

• CREDIT QUALITY METRICS - Delinquency rates improved, but provision for credit losses and net charge-offs increased from the prior year

Company press release: ID:nBw1H5j4Ka

Key Details

Analyst Coverage

• The one available analyst rating on the shares is "hold"

• 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 $150.00, about 2.1% below its April 29 closing price of $153.25

• The stock recently traded at 11 times the next 12-month earnings vs. a P/E of 11 three months ago

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