Interest rates. The vast majority of their revenue derives from mortgage financing. With the usual winter slump, to be followed by rising interest rates, the next year or two might be somewhat lean. Consequently, everything in the real estate/mortgage sector is trading at very low multiples. Their Q3 revenue/earnings weren't bad, but has uncharacteristicly slipped a bit. As another possible indication, their current loans held for sale (which I believe is value the collateral used to secure loans) appears to be way down. And there appears to be no analyst coverage at the moment, making it all the more difficult to estimate future earnings.
However, it might be a decent long-term position. Their increase in reveue and earnings has been been quite consistent and impressive over the past few years. I have to wonder how well they will do in the auto financing space (it's still a very small portion of their revenue), and whether or not their move from e-bay to autobytel will eventually pay off. I also wonder how they will fare against the likes of the Lending Tree's and E*Trade's.
I will probably wait until after 1/21/04, when they post their fourth quarter results. At last check, I think they were forcasting around 0.05 EPS, but that could drop significantly; depending, the price could take a hit.
Alor, maybe things aren't all that bad at present; they do still appear to be soliciting for several career opportunities.
... just a few thoughts from an amateur.
