Updated WRLD notes FWIW after Dabum posted his TA on Yahoo RIG board:
Why did I buy and continue to hold? Mainly FA: low PEG of .89 (First Call); ROE over 20%; attractive valuations and growth (5-yr. EPS growth TTM ROA higher than industry ave, per Market Guide); net profit margin of 15.2%, yet has room to grow; Ralph Wagner owns; 33 new offices; and nice EPS growth since 1999.
To cross check my opinions, I like to look at other sources. WRLD is in the IBD 100; has A, A+, and A+ Morningstar Grades; and a "10" Stock Scouter grade from MSN Money. ValuePro gives an intrinsic value of $29 with a dramatically reduced growth rate (just me being conservative).
Here's my updated Graham Fair Value calculation. Note that two analysts have increased their FY04 EPS estimated from $1.47 to $1.49 and one is estimating a five year growth rate of 15%, per First Call. I used a more conservative rate of 12%:
Company: WRLD
Date: 12/21/03
2004's expected earnings: $1.49
Estimated 5 yr. EPS growth rate: 12%
P/E maximum for estimate: 12
Graham Fair Value: $37.76
Current Price: $18.99
$ difference: $18.77
Percent Growth to Fair Value: 98.85%
World Acceptance Corp. is engaged in the small-loan consumer finance business, offering short-term loans, related credit insurance and ancillary products and services to individuals through 470 offices in 11 states. For the 6 months ended 9/30/03, total revenues rose 15% to $81.9M. Net income rose 26% to $11.7M. Results reflect an increase in average loan receivable balances, increased sales of other ancillary products and lower interest expense.
WRLD opened or acquired 33 new offices in FY03 and closed four nonperforming offices. The company plans to open or acquire at least 25 new offices in each of the next two fiscal years. Ave. loan size and term in 03: $687, nine months, with annual rates from 24% to 214% (regulated by state laws in a "highly structured regulatory environment.")
WRLD announced a positive surprise 10/22/03 of $.32 vs. expectation of $.30. |
