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We are the world
We are the children
We are the ones who make a brighter day
So let's start giving
There's a choice we're making
We're saving our own lives
It's true we'll make a better day
Just you and me
What a great idea. And what better way to start than to make money in the stock market. Today I bought WRLD at 39.56. I will sell it in four to six weeks at 45.59. Here’s why I like WRLD (World Acceptance Corporation).
First of all, look at this amazing chart:
It sure likes like this chart wants to climb higher….and why shouldn’t it? WRLD has been making money for quite a while now since everyone thought that the WORLD was coming to an end. Look at the revenues:
2008: $346 MM
2009: $392 MM
2010: $441 MM
You can go back each previous year and find that revenues have grown year on year since 2000.
More impressively…look at its EARNINGS:
2000 $14 MM
2001 $16 MM
2002 $19 MM
2003 $23 MM
2004 $29 MM
2005 $34 MM
2006 $39 MM
2007 $46 MM
2008 $53 MM
2009 $56 MM
2010 $74 MM
Wanna bet 2011 is going to be more than 2010??
World Acceptance Corp is in the small loan consumer finance business, offering short-term small loans, medium-term larger loans, related credit insurance and ancillary products and services to individuals. Once again we see the cash machine model in this low low interest rate environment. The privileged have access to cheap money. The less than priviledged want more money. Some of these folks can’t get loans at banks. They want to buy more HD Tee Wees so they can watch Jersey Shore on Thursday nights. Borrow money on the cheap, lend at a fair price and hedge your bets. Looks like a winner to me.
World emphasizes quality customer service and the building of strong personal relationships with its customers. As a result, a substantial portion of the Company's business is repeat business from the renewal of loans to existing customers and the origination of new loans to former customers. During fiscal 2009, the Company loaned $1.9 billion in the aggregate in 1.9 million transactions. At March 31, 2009, World had approximately 732,000 customers. The Company's loans generally are under $3,000 and have maturities of less than 24 months. World's average gross loan made in fiscal 2009 was $1,011, and the average contractual maturity was approximately eleven months.
The Company also markets computer software and related services to financial services companies through its ParaData Financial Systems subsidiary. The ParaData system is currently used in approximately 1,465 consumer loan offices, including the Company's branch offices, and ParaData services over 107 customers.
As of June 17, 2009, World operated 945 offices in South Carolina, Georgia, Texas, Oklahoma, Louisiana, Tennessee, Missouri, Illinois, New Mexico, Kentucky, Alabama and Mexico.
Full disclosure…I traded this stock in 2003…it was berry berry good to me then and it will be berry berry good for me again.
Guess what…the world is extending credit again and WRLD is there to make money on the Situation. (Not Mike the Situation from Jersey Shore…on the last episode he went out to the club and got all hammerhead sharked and couldn’t meet any girls so he got all faceful and was saying “Sko Sko Sko” but no one wanted to “sko” so he slapped Snookie).
Return on assets are 15%. Return on Equity is 22%. Operating margin is a ridiculous 31%. How do they do it?
World is one of the largest small-loan consumer finance companies in the United States and Mexico. WRLD lends small dollar amounts to the U.S.’s most non-creditworthy via installment loans. Basically WRLD makes money by lending to people who, for the most part, can’t pay. As a result, WRLD borrowers have to refinance their portfolio as their interest overhead builds. Now then, some may call this cruel and also some may call it unconscionable. I say, if this is cruel then why is it legal to sell cigarettes in this country?? Give the people what they want. If they want a loan, give them a loan. Neither a borrower or a lender be……this may be true, but there's nothing wrong in owning stock in this company for a few weeks. With the money you make in this stock, give some back to the United Way…everybody wins!
The company has made over 2.1 million loans in fiscal 2010. They have demonstrated consistent, extended record of expansion and increased profits. They operate offices in rural America in typical small strip malls with about 3 employees per site. Loan approvals are decentralized and employees have bonus incentives so they will aggressively issue loans. Having said that, there are established standards for lending, collections and profitability which are actuarially proven so that the company cannot get in hot water by extending too many bad loans. In fact, even with loan growth, the percent loan deliquencies and charge offs have not changed much over the last 10 years.
Growth strategy is to add 55 offices in the US in 2011 and also add 15 offices in Mexico. Mexico has a very favorable regulatory climate with tremendous market potential and very little competition. More offices mean more money.
World is also getting into the tax preparation business, which is consistent with the customers they usually have. Simple 1040 forms filled out for a small fee. Badda bing $40 please. This business is growing at a 10% annual clip.
All of these wonderful financial results are accompanied by a PE of only 8.4 and a forward PE of 6.7. Yea..this stock is dirt cheap. The company has a stock repurchase program to take advantage of their cheap stock price. They will FORCE the stock to go higher!
What does this mean for upcoming earnings? Well, last quarter wasn’t too bad at all:
Net income for the first quarter rose 27.9% to $18.7 million compared with $14.6 million for the same quarter of the prior year. Net income per diluted share increased 26.7% to $1.14 in the first quarter of fiscal 2011 compared with $0.90 in the prior year quarter.
Total revenues increased to $110.4 million in the first quarter of fiscal 2011, a 10.1% increase over the $100.2 million reported in the first quarter last year. Interest and fee income increased 12.9%, from $85.1 million to $96.1 million in the first quarter fiscal 2011 due to continued growth in loan volume.
Gross loans outstanding increased 13.6% to $824.9 million at June 30, 2010, up from $726.1 million at June 30, 2009. Average net loans rose 14.1% when comparing the two quarterly periods.
Here’s what their boss had to say:
"World Acceptance's record first quarter benefited from continued strong loan demand, our focus on expense control and our close management of credit risks," stated Sandy McLean, CEO. "We also continued to use our strong cash flow to aggressively pursue our stock repurchase program and during the quarter the Company bought 899,621 shares of its stock."
"We made solid progress in improving our credit performance ratios during the latest quarter," continued Mr. McLean. "Our provision for loan losses was down 3.6% to $19.7 million in the first quarter 2011 compared to $20.4 million in the first quarter of fiscal 2010. Annualized net charge-offs as a percentage of average net loans decreased from 13.8% in the first quarter of last year, to 12.5% in the first quarter of the current year, contributing to the decrease in provision expense. The 130 basis point reduction in charge offs is comparable to the decreases the Company has experienced over the past three quarters. We are pleased with these improved results over recent quarters; however, we remain cautious about future credit risks in light of current economic conditions."
This company is going to keep growing its revenues for the foreseeable future. But keep your ear to the ground. There is talk of regulation from Elizabeth Warren which seems to have driven the price down by 10% in the last week or so. Of course, any iron fisted regulation could spill WRLD’s guts to the ground faster than you can say Barack Obama. So buyer beware on this one! As for me, I’m not afraid. Full steam ahead!
I am HUGE!
$$$MR. MARKET$$$
www.mrmarketishuge.com
We are the children
We are the ones who make a brighter day
So let's start giving
There's a choice we're making
We're saving our own lives
It's true we'll make a better day
Just you and me
What a great idea. And what better way to start than to make money in the stock market. Today I bought WRLD at 39.56. I will sell it in four to six weeks at 45.59. Here’s why I like WRLD (World Acceptance Corporation).
First of all, look at this amazing chart:
It sure likes like this chart wants to climb higher….and why shouldn’t it? WRLD has been making money for quite a while now since everyone thought that the WORLD was coming to an end. Look at the revenues:
2008: $346 MM
2009: $392 MM
2010: $441 MM
You can go back each previous year and find that revenues have grown year on year since 2000.
More impressively…look at its EARNINGS:
2000 $14 MM
2001 $16 MM
2002 $19 MM
2003 $23 MM
2004 $29 MM
2005 $34 MM
2006 $39 MM
2007 $46 MM
2008 $53 MM
2009 $56 MM
2010 $74 MM
Wanna bet 2011 is going to be more than 2010??
World Acceptance Corp is in the small loan consumer finance business, offering short-term small loans, medium-term larger loans, related credit insurance and ancillary products and services to individuals. Once again we see the cash machine model in this low low interest rate environment. The privileged have access to cheap money. The less than priviledged want more money. Some of these folks can’t get loans at banks. They want to buy more HD Tee Wees so they can watch Jersey Shore on Thursday nights. Borrow money on the cheap, lend at a fair price and hedge your bets. Looks like a winner to me.
World emphasizes quality customer service and the building of strong personal relationships with its customers. As a result, a substantial portion of the Company's business is repeat business from the renewal of loans to existing customers and the origination of new loans to former customers. During fiscal 2009, the Company loaned $1.9 billion in the aggregate in 1.9 million transactions. At March 31, 2009, World had approximately 732,000 customers. The Company's loans generally are under $3,000 and have maturities of less than 24 months. World's average gross loan made in fiscal 2009 was $1,011, and the average contractual maturity was approximately eleven months.
The Company also markets computer software and related services to financial services companies through its ParaData Financial Systems subsidiary. The ParaData system is currently used in approximately 1,465 consumer loan offices, including the Company's branch offices, and ParaData services over 107 customers.
As of June 17, 2009, World operated 945 offices in South Carolina, Georgia, Texas, Oklahoma, Louisiana, Tennessee, Missouri, Illinois, New Mexico, Kentucky, Alabama and Mexico.
Full disclosure…I traded this stock in 2003…it was berry berry good to me then and it will be berry berry good for me again.
Guess what…the world is extending credit again and WRLD is there to make money on the Situation. (Not Mike the Situation from Jersey Shore…on the last episode he went out to the club and got all hammerhead sharked and couldn’t meet any girls so he got all faceful and was saying “Sko Sko Sko” but no one wanted to “sko” so he slapped Snookie).
Return on assets are 15%. Return on Equity is 22%. Operating margin is a ridiculous 31%. How do they do it?
World is one of the largest small-loan consumer finance companies in the United States and Mexico. WRLD lends small dollar amounts to the U.S.’s most non-creditworthy via installment loans. Basically WRLD makes money by lending to people who, for the most part, can’t pay. As a result, WRLD borrowers have to refinance their portfolio as their interest overhead builds. Now then, some may call this cruel and also some may call it unconscionable. I say, if this is cruel then why is it legal to sell cigarettes in this country?? Give the people what they want. If they want a loan, give them a loan. Neither a borrower or a lender be……this may be true, but there's nothing wrong in owning stock in this company for a few weeks. With the money you make in this stock, give some back to the United Way…everybody wins!
The company has made over 2.1 million loans in fiscal 2010. They have demonstrated consistent, extended record of expansion and increased profits. They operate offices in rural America in typical small strip malls with about 3 employees per site. Loan approvals are decentralized and employees have bonus incentives so they will aggressively issue loans. Having said that, there are established standards for lending, collections and profitability which are actuarially proven so that the company cannot get in hot water by extending too many bad loans. In fact, even with loan growth, the percent loan deliquencies and charge offs have not changed much over the last 10 years.
Growth strategy is to add 55 offices in the US in 2011 and also add 15 offices in Mexico. Mexico has a very favorable regulatory climate with tremendous market potential and very little competition. More offices mean more money.
World is also getting into the tax preparation business, which is consistent with the customers they usually have. Simple 1040 forms filled out for a small fee. Badda bing $40 please. This business is growing at a 10% annual clip.
All of these wonderful financial results are accompanied by a PE of only 8.4 and a forward PE of 6.7. Yea..this stock is dirt cheap. The company has a stock repurchase program to take advantage of their cheap stock price. They will FORCE the stock to go higher!
What does this mean for upcoming earnings? Well, last quarter wasn’t too bad at all:
Net income for the first quarter rose 27.9% to $18.7 million compared with $14.6 million for the same quarter of the prior year. Net income per diluted share increased 26.7% to $1.14 in the first quarter of fiscal 2011 compared with $0.90 in the prior year quarter.
Total revenues increased to $110.4 million in the first quarter of fiscal 2011, a 10.1% increase over the $100.2 million reported in the first quarter last year. Interest and fee income increased 12.9%, from $85.1 million to $96.1 million in the first quarter fiscal 2011 due to continued growth in loan volume.
Gross loans outstanding increased 13.6% to $824.9 million at June 30, 2010, up from $726.1 million at June 30, 2009. Average net loans rose 14.1% when comparing the two quarterly periods.
Here’s what their boss had to say:
"World Acceptance's record first quarter benefited from continued strong loan demand, our focus on expense control and our close management of credit risks," stated Sandy McLean, CEO. "We also continued to use our strong cash flow to aggressively pursue our stock repurchase program and during the quarter the Company bought 899,621 shares of its stock."
"We made solid progress in improving our credit performance ratios during the latest quarter," continued Mr. McLean. "Our provision for loan losses was down 3.6% to $19.7 million in the first quarter 2011 compared to $20.4 million in the first quarter of fiscal 2010. Annualized net charge-offs as a percentage of average net loans decreased from 13.8% in the first quarter of last year, to 12.5% in the first quarter of the current year, contributing to the decrease in provision expense. The 130 basis point reduction in charge offs is comparable to the decreases the Company has experienced over the past three quarters. We are pleased with these improved results over recent quarters; however, we remain cautious about future credit risks in light of current economic conditions."
This company is going to keep growing its revenues for the foreseeable future. But keep your ear to the ground. There is talk of regulation from Elizabeth Warren which seems to have driven the price down by 10% in the last week or so. Of course, any iron fisted regulation could spill WRLD’s guts to the ground faster than you can say Barack Obama. So buyer beware on this one! As for me, I’m not afraid. Full steam ahead!
I am HUGE!
$$$MR. MARKET$$$
www.mrmarketishuge.com
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