Followers | 1 |
Posts | 10 |
Boards Moderated | 0 |
Alias Born | 11/01/2011 |
Thursday, February 16, 2012 11:05:23 AM
Recent Performance
Over the last 10 years WRLD has grown EPS from $1.00 to $5.63 representing a rate of almost 19%. Revenue of the same time has grown just under 14%. The difference between the revenue growth rate and the EPS growth rate has come about due to the combination of increased margins and share repurchases. $53M was spent on share-repurchases during fiscal 2011.
Looking at its numbers over the past 10 years, importantly none of the company’s earnings growth, profitability, or margins suffered even slightly during the GFC. WRLD’s 10 performance has been not only impressive but remarkably consistent.
We like to see Free Cash Flow meet or exceed Net Income and for WRLD their total net income over the past 10 years has totaled $471M while total Free Cash Flow over that time has exceeded $1B. WRLD is a wonderful generator of cash which has allowed it to expand at a rapid rate (more on that below).
Quality Rating
Source: www.usastockvaluation.com
The company scores an admirable quality rating of 70/100. Its net debt to equity score is poor, though its balance sheet is still reasonably strong with total assets of around $800M (of which goodwill is negligible) and total liabilities of around $360M. The company also scores poorly in terms of return on retained earnings which is a function of its rapid expansion – opening new stores doesn’t bear much fruit, relatively speaking, for the first few years until revenue from the initial loans issued is materialized.
Intrinsic Value
Source: www.usastockvaluation.com
Regulatory uncertainty surrounds the company and the industry it is in. This regulatory uncertainty forces downward pressure on the share-price, creating possible buying opportunities. Companies like WRLD provide an important service to those American people who do not have access to credit through traditional channels, so it is unlikely the regulatory uncertainty will materialize negatively on WRLD’s business. We expect that the newly created “Consumer Financial Protection Bureau” will focus on preventing the sub-prime real-estate bubble from ever happening again, and look at ways to minimize unethical exploitation of the government student loan system. But concerned investors who have trouble sleeping at night during some uncertainty may want to wait for some clarity from policymakers prior to an investment in a company like WRLD.
The wonderful performance of WRLD over the past 10 years is clearly illustrated in the above graph. With huge scope for further growth (see below), this trend is likely to continue for many years. Now appears to be a reasonably good time to buy.
Investment Grade Table
Source: www.usastockvaluation.com
WRLD ranks only at number 120 on the USAStockValuation.com Investment Grade Table due to the relatively low margin of safety on offer. Investors need to consider also that Intrinsic Value is expected to rise significantly in the coming years.
Drivers of Future Growth
WRLD has been opening new offices at a hefty rate over the past 5 years. Fiscal 2011 saw 77 new branches open, an increase of 7.8%. The below illustrates the rapid rate of growth for the company in terms of establishment of new offices:
Source: www.worldacceptance.com
Fiscal 2011 also saw the company enter Wisconsin for the first time, bringing the number of US states in which WRLD has a presence to 12. With so many states not yet entered, huge scope for growth still exists for the company. WRLD is also growing in Mexico, proving that their business model is successful outside of the US, which bodes it well should it wish to expand into other countries.
WRLD’s goal for 2012 is to open a further 63 offices in the US and a further 10 in Mexico. It is uncertain how many offices the company will eventually have in the US, but with a business model that produces great profits as well as profitability, there is no reason why the company won’t continue to expand geographically into many more states around the country.
Conclusion
Management clearly treat shareholders as owners of the company through their language in annual reports and other official documentation. And they have created a very successful business model which allows for significant geographic expansion. The future looks nothing but bright for the company even considering the lingering regulatory uncertainty (which we see as a very low risk for WRLD). Investors may see a good opportunity at current prices to buy a part ownership in a fast growing business.
Regards,
James Ranson
james@usastockvaluation.com
Recent WRLD News
- Form 8-K - Current report • Edgar (US Regulatory) • 08/22/2024 04:26:32 PM
- Form 10-Q - Quarterly report [Sections 13 or 15(d)] • Edgar (US Regulatory) • 08/08/2024 08:20:31 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/02/2024 08:52:28 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 08/01/2024 02:13:26 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 07/26/2024 11:35:10 AM
- World Acceptance Corporation Reports Fiscal 2025 First Quarter Results • Business Wire • 07/26/2024 11:30:00 AM
- Form ARS - Annual Report to Security Holders • Edgar (US Regulatory) • 07/22/2024 06:00:26 PM
- Form DEF 14A - Other definitive proxy statements • Edgar (US Regulatory) • 07/22/2024 05:59:27 PM
- World Acceptance Corporation Announces First Quarter 2025 Conference Call on the Internet • Business Wire • 07/19/2024 03:00:00 PM
- Form 11-K - Annual report of employee stock purchase, savings and similar plans • Edgar (US Regulatory) • 06/13/2024 08:35:02 PM
- Form 10-K - Annual report [Section 13 and 15(d), not S-K Item 405] • Edgar (US Regulatory) • 05/23/2024 08:06:04 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 05/21/2024 08:51:21 PM
- World Acceptance Corporation Reports Fiscal 2024 Fourth Quarter Results • Business Wire • 05/02/2024 11:30:00 AM
- World Acceptance Corporation Announces Fourth Quarter 2024 Conference Call on the Internet • Business Wire • 04/25/2024 03:00:00 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 02/28/2024 02:13:12 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 02/22/2024 09:07:28 PM
- Form SC 13G/A - Statement of acquisition of beneficial ownership by individuals: [Amend] • Edgar (US Regulatory) • 02/14/2024 09:32:36 PM
- Form 10-Q - Quarterly report [Sections 13 or 15(d)] • Edgar (US Regulatory) • 02/07/2024 09:09:39 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 02/02/2024 06:23:21 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 02/01/2024 03:55:27 PM
- Form SC 13G/A - Statement of acquisition of beneficial ownership by individuals: [Amend] • Edgar (US Regulatory) • 01/24/2024 10:23:52 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 01/19/2024 12:35:30 PM
- World Acceptance Corporation Reports Fiscal 2024 Third Quarter Results • Business Wire • 01/19/2024 12:30:00 PM
- World Acceptance Corporation Announces Third Quarter 2024 Conference Call on the Internet • Business Wire • 01/12/2024 04:00:00 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 12/04/2023 10:18:45 PM
Transforming Alzheimer's Treatment: Innovative Combinations to Boost Cognition • PFE • Oct 2, 2024 9:00 AM
Unitronix Corp Unveils Cryptocurrency Investment Portfolio Strategy • UTRX • Oct 2, 2024 8:40 AM
Integrated Ventures, Inc Reports Total 2024 Revenues Of $5,863,935 vs $3,862,849 for 2023. • INTV • Oct 1, 2024 9:00 AM
Nightfood Signs Letter of Intent to Acquire Los Angeles Cooking School, Integrating Automation and Robotics with World-Class Culinary Training • NGTF • Oct 1, 2024 8:30 AM
ZenaTech, Inc. (NASDAQ: ZENA) To Commence Trading Today • COOP • Oct 1, 2024 7:00 AM
Element79 Gold Corp secures loi for launching tailings reprocessing business in Arequipa, Peru • ELMGF • Oct 1, 2024 6:38 AM