Cash Converters International Ltd (ASX: CCV) finished Monday's trading session down 4.7% at $1.11 after reporting its half-year results.
Here's what the leading personal loans provider reported:
- Revenue jumped 20% to $187.7 million
- Normalised earnings before interest, tax, depreciation and amortisation (EBITDA) grew 31.4% to $32.4 million
- Normalised net profit grew 27.5% to $15.3 million for the half
- The board declared a fully franked dividend of 2 cents per share which was in line with the prior period. Cash Converters' shareholders will be able to participate in a dividend reinvestment plan with the interim dividend to be paid on 31 March 2015
- The group achieved a record breaking December lending performance in Australia for both personal loan and cash advance products
- The personal loan book advanced 22.7% to $94.5 million
What now?
Looking forward to the remainder of the financial year, management provided a positive outlook in which it suggested the record lending volumes achieved in December would result in continued earnings growth in the second half.
While perhaps a tad conservative, assuming an annualised first half result and with approximately 479 million shares on issue, the stock is trading on a price-to-earnings ratio of 17.4x. Given the level of growth being experienced across the financing units, the opportunities to further consolidate the Corporate Stores division and the potential for an improved performance from the UK division, this multiple may not be demanding.
However, investors considering investing in Cash Converters should also take the time to analyse peers Thorn Group Ltd (ASX: TGA) and Money3 Corporation Limited (ASX: MNY). While all three stocks have outperformed the 10% return from the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) over the past 12 months, Cash Converters has seen its share price rise by 21%, compared with a 43% gain for Thorn and a massive 72% surge for Money3.
