Ah…the scent of local reporting season is wafting around the office with Credit Corp (CCP) out with full year results this morning ahead what’s likely to be fairly lively month ahead for Australian equities. Looking at CCP’s share price move today could well be precursor to what’s in store, with the stock down ~3% early before rallying strongly as the CEO does the rounds and talks up their US growth opportunity – a range +/-10%. As shown below, the FY18 result was about a 2% beat on the EPS line with revenue as per programmed while the dividend met expectations. A good result considering that the debt collector purchased less debt in the period which essentially means they ran on lower inventory, perhaps that’s why their FY19 guidance was lower than expected.
In terms of guidance, they outlined the following…
Consensus was already at $71m in terms of NPAT, 148cents at the EPS line and 74cps for the dividend, so a slight miss in terms of forward guidance, nevertheless, this is a business trading 13x so not a huge amount of upside built in. Assuming they meet company guidance, a business growing at 5% pa with a decent dividend while trading on a cheaper multiple than the market looks relatively attractive.
Creditcorp (CCP) Chart
Market Matters Take/Outlook
The US business is very important for CCP’s future growth. They started it 6 years ago and it has now only just pass breakeven, however this is where the growth resides. CCP looks an interesting (cheap) business below $20 despite the miss on guidance.
In terms of guidance, they outlined the following…
Consensus was already at $71m in terms of NPAT, 148cents at the EPS line and 74cps for the dividend, so a slight miss in terms of forward guidance, nevertheless, this is a business trading 13x so not a huge amount of upside built in. Assuming they meet company guidance, a business growing at 5% pa with a decent dividend while trading on a cheaper multiple than the market looks relatively attractive.
Creditcorp (CCP) Chart
