As Costco expands the program, the revenue stream (income) to JNNE increases as well.
The company has indicated previously that they get about $65 on each loan that closes. As I recall, the average loan is about $180,000.
I don't know what has closed so far, but if Costco does what they expect to do in this program ($3-4 Billion in loans this year and $32 Billion in loans next year), we can do some calculations...
Costco has 211 stores in the USA.
$32 Billion divided over 211 stores = $151,658,000 per store.
$151,658,000 divided by 12 months = $12,638,000 per month per store.
The first payment covered loans closed through Dec 31, 1997. That was only about 2 months into the program. And there were probably no loans in the "pipeline" on Day 1. So let's discount the first 45 day as just a processing time (since most loans seem to take about that long). And let's say they tested the program in only 3 stores or so to begin with.
We would have 50% (1/2 month) of normal average store volume for 3 stores.
That's $12,638,000 x 50% x 3 = $18,957,000 in loan volume closed.
$18,957,000 divided by $180,000 (avg loan) = 105 loans
105 loans x $65 = $6,825
That's not a big amount, but it's significant when you consider what Costco expects to do as they expand this to all their 211 stores.
-----------------------
NEXT 12-MONTHS:
$3.5 Billion divided by $180,000 = 19,444 average loans
19,444 average loans x $65 = $1,263,860 to JNNE
NEXT YEAR (MONTHS 13-24):
$32 Billion divided by $180,000 = 177,777 average loans
177,777 average loans x $65 = $11,555,500 to JNNE
-------------------------------------------------
And this income has virtually NO expenses!
JNNE says they will have a POSITIVE EPS THIS YEAR !
I can believe that.
These are MY estimates that I did tonight based on what I understand about JNNE's program. It might be interesting to check with JNNE and see if I'm even "in the ballpark." :-)
Best wishes,
Brad |
