Core Viewpoint - Atlanticus Holdings Corporation (ATLC) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive trend in earnings estimates which is a significant factor influencing stock prices [1][4]. Earnings Estimates and Ratings - The Zacks rating system is based solely on a company's changing earnings picture, tracking the Zacks Consensus Estimate for EPS from sell-side analysts [2]. - The recent upgrade reflects an improvement in Atlanticus's earnings outlook, which could positively affect its stock price [4][6]. Impact of Earnings Estimates on Stock Prices - Changes in a company's future earnings potential, as shown by earnings estimate revisions, are strongly correlated with near-term stock price movements [5]. - Institutional investors often adjust their valuations based on earnings estimates, leading to significant stock price movements when they buy or sell large amounts of shares [5]. Earnings Estimate Revisions for Atlanticus - Atlanticus is projected to earn $5.99 per share for the fiscal year ending December 2025, with no year-over-year change expected [9]. - Over the past three months, the Zacks Consensus Estimate for Atlanticus has increased by 6.6%, indicating a positive trend in earnings estimates [9]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 (Strong Buy) stocks historically generating an average annual return of +25% since 1988 [8]. - The upgrade to Zacks Rank 2 places Atlanticus in the top 20% of Zacks-covered stocks, suggesting it has superior earnings estimate revision features and potential for market-beating returns [10][11].

Core Insights - Atlanticus Holdings Corporation has successfully refinanced a $750 million term securitization, achieving a reduction of over 200 basis points in the coupon rate compared to the previous bonds [1][2] - The refinancing is part of Atlanticus's strategy to reduce costs and enhance the reach of its Mercury brand, aiming to empower more everyday Americans [2] - The company has a strong operational history, having serviced over 20 million customers and managed $48 billion in consumer loans over 25 years [3] Company Overview - Atlanticus is a financial technology company that partners with banks, retailers, and healthcare providers to offer inclusive financial services [3] - The company utilizes proprietary technology and analytics to support a range of consumer loan products, including private label credit and general-purpose credit cards [3] - Atlanticus also operates an Auto Finance subsidiary that caters to automotive dealers and non-prime financial organizations with various financing and service programs [3]

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Core Insights - Atlanticus Holdings Corporation reported significant growth in managed receivables and consumer accounts, serving over 5.7 million consumers and managing $6.6 billion in receivables following a transformational acquisition of Mercury Financial [1][3][7]. Financial and Operating Highlights - Managed receivables increased by 148.7% to $6.6 billion, including $3.2 billion from the Mercury acquisition [7][9]. - Total operating revenue rose by 41.1% to $495.3 million compared to the same quarter in 2024 [7][13]. - Net income attributable to common shareholders decreased by 2.4% to $22.7 million, or $1.21 per diluted share [7][23]. Acquisition Impact - The acquisition of Mercury Financial for approximately $166.5 million added 1.3 million new accounts and significantly enhanced the company's scale and technology [3][7]. - The integration of Mercury is progressing ahead of schedule, focusing on expense reduction and efficiency maximization [4][6]. Growth Metrics - The company achieved record account origination volumes, adding over 730,000 new accounts during the quarter, excluding those from the Mercury acquisition [5][7]. - Adjusted return on average equity reached 19.5%, reflecting strong profitability targets [5][23]. Revenue Breakdown - Total operating revenue and other income consists of interest income, finance charges, late fees, and other fees related to credit products [11][13]. - The increase in revenue was driven by growth in new credit card and private label customers, with over 400,000 new accounts added in the quarter [13][12]. Expense Analysis - Total operating expenses increased by 71.8% due to higher marketing costs, variable servicing costs, and costs associated with the Mercury acquisition [19][21]. - Interest expense rose to $75.5 million, primarily due to increased outstanding debt and borrowing costs [14][15]. Future Outlook - The company anticipates continued growth in managed receivables and expects to see improvements in the fair value of acquired receivables as product and policy changes are implemented [17][18]. - Marketing costs are expected to increase in 2025 and 2026, reflecting the company's strategy to enhance customer acquisition efforts [22][21].

Acquisition and Strategic Growth - Atlanticus closed the acquisition of Mercury for approximately $166.5 million in cash, adding 1.3 million credit card accounts and $3.2 billion in credit card receivables[187][188]. - The acquisition of Mercury aligns with Atlanticus's strategic objective to expand consumer credit offerings and increase scale within credit card operations[187]. - The contingent consideration from the Mercury acquisition may result in earn-out payments based on charge-off levels over three years[188]. - The addition of receivables from the Mercury acquisition is expected to contribute positively to the overall receivables base, enhancing future revenue potential[250]. - The company expects continued growth in the acquisition of general purpose credit card receivables throughout 2025, aided by the Mercury acquisition[259]. Financial Performance - Total operating revenue and other income for the three months ended September 30, 2025, was $495,292,000, an increase of $144,338,000 (approximately 41%) from $350,954,000 in 2024[202]. - Total operating revenue and other income for the nine months ended September 30, 2025, reached $1,233,985,000, up by $277,216,000 (approximately 29%) from $956,769,000 in 2024[202]. - Net income for the three months ended September 30, 2025, was $24,588,000, a decrease of $4,601,000 (approximately 18%) from $29,189,000 in 2024[202]. - Total operating expenses for the three months ended September 30, 2025, were $108,333,000, an increase of $45,259,000 (approximately 72%) from $63,074,000 in 2024[202]. - The company expects continued growth in total interest income and related fees throughout 2025, driven by increases in private label credit and general purpose credit card receivables[206]. Receivables and Charge-offs - Private label credit and general purpose credit card receivables increased to $6,600.1 million as of September 30, 2025, from $2,653.8 million as of September 30, 2024, with the acquisition of Mercury contributing $3,159.9 million[205]. - Charge-offs increased to $231.8 million and $677.1 million for the three and nine months ended September 30, 2025, from $201.5 million and $650.2 million for the same periods in 2024[213]. - The combined principal net charge-off ratio, annualized, was 4.4% for the third quarter of 2025, compared to 4.1% in the second quarter of 2025, indicating a return to historically normalized levels[263]. Interest and Expenses - Interest expense increased by $33,000,000 (approximately 78%) for the three months ended September 30, 2025, compared to the same period in 2024, primarily due to new borrowings and increased costs of capital[210]. - The company anticipates additional debt financing in the coming quarters, which may lead to increased interest expenses due to higher effective interest rates[210]. - The interest expense ratio, annualized, is expected to increase throughout 2025 due to higher costs of capital from new financing arrangements[256]. Delinquency and Credit Quality - The percentage of receivables 90 or more days past due was 5.7% in Q2 2025, down from 6.9% in Q2 2024, reflecting better delinquency management[243]. - The company’s strategy for managing delinquency includes credit line management and pricing based on risks, which is crucial for maintaining portfolio stability[242]. - Future delinquency rates are expected to marginally increase due to a planned shift in receivables originated, but will be offset by more restrictive product policies[249]. Cash Flow and Financing - For the nine months ended September 30, 2025, the company generated $371.7 million in cash flows from operations, an increase from $346.8 million in the same period of 2024[287]. - Cash used in investing activities for the nine months ended September 30, 2025, was $1,027.3 million, compared to $571.0 million in 2024, primarily due to increased investments in credit card receivables[287]. - The company generated $681.9 million from financing activities in the nine months ended September 30, 2025, compared to $225.3 million in 2024, driven by the issuance of Senior Notes and increased net borrowings[288]. Tax and Regulatory Considerations - The effective tax rates for the three and nine months ended September 30, 2025, were 24.0%, compared to 21.5% and 19.7% for the same periods in 2024[224][225]. - The effective tax rates for the nine months ended September 30, 2025, were above the statutory rate due to state and foreign income tax expenses and disallowance of certain deductions[225]. Risks and Forward-looking Statements - Forward-looking statements include expectations regarding revenue, income ratios, and credit quality, which are subject to significant risks and uncertainties[299]. - The company faces risks such as credit losses, reliance on technology, and regulatory challenges that could materially affect future financial results[300]. - The company has recently acquired Mercury, which introduces integration risks that could impact operations[300].

Core Viewpoint - PROG Holdings, Inc. has announced the sale of its Vive Financial credit card receivables portfolio to Atlanticus Holdings Corporation, aiming to enhance capital efficiency and profitability while continuing to provide credit solutions for near and below-prime consumers [1][2]. Company Overview - PROG Holdings, Inc. is a fintech holding company based in Salt Lake City, UT, that offers transparent payment options and inclusive financial products through its subsidiaries, including Progressive Leasing and Four Technologies [4]. - Atlanticus Holdings Corporation specializes in enabling financial services for bank, retail, and healthcare partners, leveraging over 25 years of experience and servicing more than 20 million customers with $44 billion in consumer loans [5]. Transaction Details - The transaction involves PROG Holdings receiving approximately $150 million in cash, while Atlanticus acquires around $165 million in credit card receivables [2]. - Following the completion of the transition services agreement, Vive Financial will cease its loan servicing activities, and both companies will collaborate to ensure a smooth transition for customers and retail partners [2]. Future Outlook - PROG Holdings plans to provide further details regarding the financial impact of this transaction during its upcoming third quarter earnings call [3].

Core Viewpoint - Atlanticus Holdings Corporation is identified as one of the most undervalued financial stocks by Wall Street analysts, with JMP Securities raising its target price from $78 to $95 while maintaining a "Market Outperform" rating [1][2]. Group 1: Company Overview - Atlanticus Holdings Corporation operates as a financial technology company through two segments: Credit as a Service (CaaS) and Auto Finance. The CaaS segment offers private-label and general-purpose credit cards, while the Auto Finance segment focuses on purchasing and servicing loans secured by automobiles from independent dealers [3]. Group 2: Recent Developments - JMP Securities raised its target price for Atlanticus after analyzing the impact of its acquisition of Mercury Financial, updating assumptions regarding net yield growth for the Mercury portfolio [2]. - The acquisition of Mercury Financial is expected to enhance Atlanticus's earnings per share by approximately $1.00 in 2026 and $3.00 in 2027, although much of this anticipated earnings boost is attributed to one-time fair value gains on the Mercury portfolio [2].

Core Insights - Atlanticus Holdings Corporation (ATLC) shares increased by 5.5% to close at $76.15, supported by strong trading volume, and have gained 17.6% over the past four weeks [1][2] Company Developments - The recent stock price rise may be attributed to B. Riley raising the target price for ATLC, alongside the acquisition of Mercury Financial LLC, which enhances Atlanticus' credit program offerings and is expected to create value through portfolio optimization and new growth opportunities [2] - Atlanticus leverages its proprietary fintech platform and advanced data analytics to provide inclusive credit solutions, targeting underserved consumers and ensuring strong recurring revenues across various sectors [3] Financial Performance Expectations - The company is projected to report quarterly earnings of $1.49 per share, reflecting a year-over-year increase of 17.3%, with revenues expected to reach $388.81 million, up 10.8% from the previous year [4] - The consensus EPS estimate for Atlanticus has remained stable over the last 30 days, indicating that stock price movements may be influenced by trends in earnings estimate revisions [5] Industry Context - Atlanticus is part of the Zacks Financial - Miscellaneous Services industry, where WisdomTree, Inc. (WT) experienced a 3% decline in the last trading session, contrasting with ATLC's performance [6]

Company Performance - Atlanticus Holdings Corporation (ATLC) has seen a stock price increase of 20.3% over the past month, reaching a new 52-week high of $78.91 [1] - Year-to-date, the stock has gained 36.5%, outperforming the Zacks Finance sector's 14% gain and the Zacks Financial - Miscellaneous Services industry's 6.6% return [1] Earnings and Revenue Expectations - Atlanticus has consistently beaten earnings estimates, reporting an EPS of $1.51 against a consensus estimate of $1.3 in its last earnings report [2] - For the current fiscal year, the company is expected to post earnings of $6.13 per share on revenues of $1.51 billion, reflecting a 28.51% change in EPS and a 15.05% change in revenues [3] - For the next fiscal year, earnings are projected to be $7.64 per share on revenues of $1.66 billion, indicating a year-over-year change of 24.55% in EPS and 9.98% in revenues [3] Valuation Metrics - Atlanticus has a Value Score of A, with Growth and Momentum Scores of B and F, respectively, resulting in a VGM Score of A [6] - The stock trades at 12.4 times current fiscal year EPS estimates, below the peer industry average of 13 times, and at 8.7 times trailing cash flow compared to the peer group's average of 11.7 times [7] Zacks Rank - Atlanticus holds a Zacks Rank of 2 (Buy), supported by a solid earnings estimate revision trend [8] - The company meets the criteria for selection based on Zacks Rank and Style Scores, suggesting potential for further stock price appreciation [8] Industry Comparison - The Financial - Miscellaneous Services industry is performing well, ranking in the top 25% of all industries, providing favorable conditions for both Atlanticus and its peer, Oportun Financial Corporation (OPRT) [11] - Oportun Financial Corporation also has a Zacks Rank of 2 (Buy) and strong earnings expectations, indicating a competitive landscape within the industry [9][10]

Core Insights - Atlanticus Holdings Corp (ATLC) shares have surpassed the average analyst 12-month target price of $69.57, currently trading at $72.17 per share, prompting analysts to consider either downgrading their valuation or raising their target price [1][3] Analyst Target Summary - There are 7 different analyst targets contributing to the average for Atlanticus Holdings Corp, with the lowest target at $56.00 and the highest at $84.00, resulting in a standard deviation of $9.623 [2] - The average target price reflects a collective assessment rather than a single analyst's opinion, indicating a potential for further evaluation by investors regarding the stock's future trajectory [3] Analyst Ratings Breakdown - The current analyst ratings for ATLC show 5 strong buy ratings, 3 hold ratings, and no sell ratings, maintaining an average rating of 1.75, where 1 is strong buy and 5 is strong sell [4]