Considering the substantial profit growth and total shareholder returns displayed by Credit Corp Group Limited (ASX: CCP) and Collection House Limited (ASX: CLH) over the past few years it really is quite surprising that they don't have higher profiles amongst the investing community.
While the service offering of these two companies does differ in certain respects, at their core, both companies offer debt purchasing and debt collection services.
In the past five financial years (FY), Credit Corp's share price has increased from $1.20 at the beginning of FY 2010 to $8.70 at the end of FY 2014. Currently the stock is trading at $11.19.
Meanwhile, Collection House's share price increased from 47 cents at the beginning of FY 2010 to $1.88 at the end of FY 2014. Currently the stock is trading at $2.26.
Arguably the share price growth hasn't been unfounded.
In the case of Credit Corp, over the past five-year period revenues have grown from $93.4 million to $174 million, profits have expanded from $13.5 million to $34.8 million and dividends have increased from 8 cents per share (cps) to 40 cps.
In comparison, Collection House has seen its revenues increase from $73.8 million to $107.3 million, net profit has grown from $8.9 million to $18.7 million and dividends have expanded from 5.8 cps to 8 cps.
Outlook remains positive
Both companies are pursuing growth initiatives. In Credit Corp's case this includes an expansion into the USA and also branching out into consumer lending.
In Collection House's case it includes an expansion into the full spectrum of the receivables management process including legal and insolvency services, early stage receivables outsourcing and consulting and training.
Based on management's guidance for the full year, Credit Corp is set to deliver an increase in net profit after tax (NPAT) to between $36 million and $38 million.
Collection House has provided guidance for NPAT within a range of $21 million to $22 million, which implies double-digit bottom line growth.
