Today, receivables management and collections company, Collection House Limited (ASX: CLH), reaffirmed its full year guidance for net profit after tax (NPAT) of between $21 million and $22 million.
Based on its 2014 financial year (FY) record NPAT of $18.7 million, the mid-point of the guidance implies a robust 15% jump in profit this year.
The company says its Collections Services business will reinforce steady earnings and although the market for collections has been challenging, it continues to expect double-digit growth in purchased debt ledger (PDL) collections.
The positive rhetoric is echoed by Australia's largest receivables management company, Credit Corp Group Limited (ASX: CCP).
It also issued a statement to the ASX today.
Indeed, whilst Collection House has delivered compound annual profit growth of 19% over the past four years, Credit Corp showed it has achieved 26% over the five years to FY14.
Pleasingly, it revised its purchasing guidance to between $130 and $135 million for FY15, up from $120 to $130 million, whilst NPAT guidance was narrowed to between $37 and $38 million, from between $36 and $38 million.
Should you buy Credit Corp and Collection House shares?
Despite their steady growth over many years and reliable dividend yields, shares in both companies are currently priced for buyers. Credit Corp shares trade at a price-earnings (PE) ratio of just 14 and boast a dividend yield of 3.6% fully franked. Meanwhile the slightly smaller Collection House trades at a PE of 13.5 times and dividend yield of 3.8% fully franked.
