Collection Strategies - The company employs various collection strategies, including reducing or eliminating contractual interest and waiving fees based on payment history, to improve collections and customer service [46]. - Collection strategies are regularly monitored and adjusted based on customer satisfaction, delinquency rates, expected losses, and costs to collect, leading to better collection experiences and lower bad debt losses [49]. - Accounts that are 90 days or more past due are placed on non-accrual status, which may result in reduced interest and fees if certain payment conditions are met [54]. - The company utilizes re-aging techniques for accounts that meet specific criteria, potentially delaying or reducing delinquencies and charge-offs by less than 10% and 5%, respectively [52]. - The company has over 25 years of experience in customer service and collections, which helps mitigate credit and payment risks [336][341]. Workforce and Employment - The company has 417 employees as of December 31, 2024, with an average tenure of over 11 years, indicating a stable workforce [63]. Competition and Market Environment - The auto finance segment faces competition from both national and regional companies, as well as smaller private firms, creating a fragmented market [62]. - The company faces substantial competition from financial service and fintech companies, impacting its financial performance based on the performance of investments in receivables [61]. Credit Loss and Financial Risks - The company establishes an allowance for credit losses based on loan performance, delinquency data, and economic trends, which could materially affect operations if actual results differ from estimates [331]. - A 10% increase in credit loss rates could result in a pre-tax earnings loss of $88.2 million, while a decrease could yield a gain of $88.2 million [337]. - The company is exposed to market return risk through loans, interest, and fees receivable, which are measured at fair value using a discounted cash flow methodology [338][339]. Interest Rate Risk - The company has $407.5 million in notes payable subject to interest rate risk, with a potential pre-tax earnings impact of $(4.1) million if interest rates increase by 100 basis points [335]. - The Auto Finance segment's loans receivable are fixed rate amortizing loans, exposing the company to interest rate risks due to structured financing facilities priced over floating rate benchmarks [334]. - The company mitigates interest rate risk by maintaining the majority of its debt facilities at fixed interest rates [333]. - The fair value of loans at December 31, 2024, is estimated at $2,630.3 million, with a potential impact of $(56.6) million on pre-tax earnings if discount rates increase by 10% [340]. - A 10% change in payment rates could lead to a pre-tax earnings impact of $201.5 million if rates increase, and $(201.5) million if they decrease [342]. - Total borrowings associated with loans at fair value and amortized cost amount to $2.2 billion as of December 31, 2024 [343]. Sensitivity Analysis - The sensitivity analysis assumes an immediate hypothetical change in market interest rates and credit loss rates, indicating potential volatility in earnings [335][337].

Core Insights - Atlanticus Holdings Corporation (ATLC) has consistently surpassed earnings estimates, averaging a beat of 8.52% over the last two quarters [1][2] - The most recent earnings report showed earnings of $1.27 per share, exceeding the Zacks Consensus Estimate of $1.23 per share by 3.25% [2] - The previous quarter also saw a positive surprise, with actual earnings of $0.99 per share against an expected $0.87 per share, resulting in a 13.79% surprise [2] Earnings Estimates and Predictions - Estimates for Atlanticus have been trending higher, supported by its history of earnings surprises [3] - The stock currently has a positive Zacks Earnings ESP of +4.67%, indicating bullish sentiment among analysts regarding its earnings prospects [6] - The combination of a positive Earnings ESP and a Zacks Rank of 3 (Hold) suggests a strong possibility of another earnings beat [6] Statistical Insights - Research indicates that stocks with a positive Earnings ESP and a Zacks Rank of 3 or better have a nearly 70% chance of producing a positive surprise [4] - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, with the Most Accurate Estimate reflecting the latest analyst revisions [5] - A negative Earnings ESP does not necessarily indicate an earnings miss, but it does reduce predictive power [6]

Core Viewpoint - Atlanticus Holdings Corporation (ATLC) has experienced a significant increase in stock price, attributed to its competitive strengths and positive earnings expectations [1][2][4]. Company Overview - Atlanticus specializes in providing credit to consumers underserved by traditional financial institutions, particularly those with lower FICO scores [3]. - The company leverages over 25 years of experience in consumer loan servicing, utilizing advanced technology and predictive analytics to enhance its offerings [2][3]. Financial Performance - The upcoming quarterly earnings report is expected to show earnings of $1.21 per share, reflecting a year-over-year increase of 10% [4]. - Revenue projections stand at $356.22 million, indicating a 15.4% growth compared to the same quarter last year [4]. Market Sentiment - The consensus EPS estimate for Atlanticus has been revised 3.4% higher in the last 30 days, suggesting a positive trend that may lead to stock price appreciation [5]. - The stock currently holds a Zacks Rank of 3 (Hold), indicating a neutral outlook in the market [5]. Industry Context - Atlanticus is part of the Zacks Financial - Miscellaneous Services industry, which includes other companies like MidCap Financial Investment (MFIC) [5]. - MFIC's EPS estimate has remained unchanged, with a year-over-year decline of 10.9%, and it currently holds a Zacks Rank of 2 (Buy) [6].

Core Insights - The article emphasizes the importance of value investing, highlighting the strategy of identifying undervalued companies in the market [2] - Zacks has developed a Style Scores system to help investors find stocks with specific traits, particularly focusing on the "Value" category [3] - Atlanticus (ATLC) is presented as a strong value stock, currently holding a Zacks Rank of 2 (Buy) and a Value grade of A [4] Valuation Metrics - Atlanticus has a P/E ratio of 8.01, significantly lower than the industry average of 16.52, indicating potential undervaluation [4] - The company's P/B ratio stands at 1.51, compared to the industry's average of 3.30, suggesting a solid market value relative to its book value [5] - Atlanticus's P/CF ratio is 6.87, which is attractive against the industry's average of 16.96, reflecting a favorable cash flow outlook [6] Investment Outlook - The metrics indicate that Atlanticus is likely undervalued, and combined with a strong earnings outlook, it is considered a great value stock at the moment [7]

Group 1: Earnings Performance - Atlanticus Holdings Corporation (ATLC) reported quarterly earnings of $1.27 per share, exceeding the Zacks Consensus Estimate of $1.23 per share, and up from $1.03 per share a year ago, representing an earnings surprise of 3.25% [1] - The company posted revenues of $350.95 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 7.44%, compared to year-ago revenues of $294.91 million [2] - Over the last four quarters, Atlanticus has surpassed consensus EPS estimates four times and topped consensus revenue estimates three times [2] Group 2: Stock Performance and Outlook - Atlanticus shares have increased by approximately 8% since the beginning of the year, while the S&P 500 has gained 24.3% [3] - The company's earnings outlook will be crucial for future stock movements, with current consensus EPS estimates for the coming quarter at $1.22 and $4.54 for the current fiscal year [4][7] - The estimate revisions trend for Atlanticus is currently unfavorable, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] Group 3: Industry Context - The Financial - Miscellaneous Services industry, to which Atlanticus belongs, is currently in the top 31% of over 250 Zacks industries, suggesting a favorable industry outlook [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Core Viewpoint - Atlanticus Holdings Corporation reported strong financial results for Q3 2024, highlighting significant growth in managed receivables, operating revenue, and net income, while maintaining a conservative credit posture and consistent profitability [1][3][19]. Financial and Operating Highlights - Managed receivables increased by 14.6% to $2.7 billion compared to Q3 2023 [2][8]. - Total operating revenue rose by 19.0% to $351.0 million [2][11]. - Net income attributable to common shareholders was $23.2 million, or $1.27 per diluted share, reflecting a 22.9% increase [2][19]. - The company served over 380,000 new accounts during the quarter, bringing the total to 3.7 million accounts [2][8]. Management Commentary - The CEO expressed satisfaction with the continued growth in revenue, managed receivables, and serviced accounts, emphasizing a return on equity exceeding 20% [3][4]. - The company noted that real wage gains for consumers have contributed to stable performance, despite slightly higher delinquency rates than pre-pandemic levels [4]. Growth Opportunities - The company is optimistic about growth opportunities across its three primary product lines: general purpose credit cards, point of sale finance, and healthcare payments [5][10]. - The pipeline of new partners and offerings positions the company for above-market long-term growth [5]. Revenue Composition - Total operating revenue includes interest income, finance charges, late fees, and other fees related to credit products [9][11]. - The company anticipates continued growth in interest income and related fees for 2024, driven by the addition of new retail partners and growth within existing partnerships [10][11]. Interest Expense and Debt - Interest expense for Q3 2024 was $42.5 million, up from $28.3 million in Q3 2023, primarily due to increased outstanding debt and borrowing costs [12][13]. - Outstanding notes payable increased to $1.98 billion as of September 30, 2024, reflecting the addition of multiple credit facilities [13]. Changes in Fair Value of Loans - Changes in fair value of loans increased to $203.7 million for Q3 2024, driven by growth in underlying receivables and regulatory changes affecting late fees [14][15]. Operating Expenses - Total operating expenses rose by 11.7% compared to Q3 2023, influenced by variable servicing costs and inflationary pressures [16][17]. - The company expects continued increases in servicing costs and salaries in 2024 as receivables grow [17][18]. Shareholder Returns - The company repurchased and retired 11,193 shares of common stock at a cost of $0.3 million during the quarter [20].

Financial Performance - Total operating revenue for the three months ended September 30, 2024, was $350,954,000, an increase of $56,041,000 from $294,913,000 in 2023, representing a growth of approximately 19%[153] - Net income attributable to controlling interests was $29,543,000 for the three months ended September 30, 2024, compared to $25,240,000 in 2023, reflecting an increase of $4,303,000 or approximately 17%[153] - Total operating revenue for 2024 reached $956.8 million, a 13% increase from $846.6 million in 2023[154] - Net income attributable to controlling interests was $858,000 for 2024, compared to $860,000 in 2023, reflecting a slight decrease[155] - Operating expenses totaled $63,074,000 for the three months ended September 30, 2024, an increase of $6,591,000 from $56,483,000 in 2023[153] Credit and Receivables - The company has serviced over $41 billion in consumer loans over more than 25 years, indicating a strong operational history in the financial technology sector[141] - Private label credit and general purpose credit card receivables increased to $2,653.8 million as of September 30, 2024, up from $2,314.6 million in 2023, indicating growth in customer acquisition[157] - Total outstanding receivables grew to $2,653.8 million as of September 30, 2024, up from $2,314.6 million a year earlier, indicating growth in both private label and general purpose credit card receivables[171] - Managed receivables as of September 30, 2024, totaled $2,654.1 million, reflecting an increase from $2,415.1 million in the prior year[185] - The company continues to focus on managing delinquency and receivables losses through account management strategies[190] Credit Losses and Provisions - The company reported a provision for credit losses of $4,633,000 for the three months ended September 30, 2024, an increase of $4,095,000 from $538,000 in 2023[153] - Provision for credit losses increased to $9.3 million in 2024 from $1.6 million in 2023, primarily due to higher loss estimates in the Auto Finance segment[162] - The Expected net principal credit loss rate has decreased due to a higher number of receivables from private label credit accounts, with continued improvements in delinquency rates expected[168] - The combined principal net charge-off ratio for the three months ended September was 22.2%, a decrease from 26.0% in June[191] - The combined principal net charge-off ratio, annualized, was reported at 8.4% for the three months ended September 30, 2024, down from 9.3% in the previous quarter[221] Interest and Expenses - Interest expense rose by $38.8 million for the nine months ended September 30, 2024, due to increased borrowings and higher costs of capital[160] - The effective interest rates on debt have increased, leading to anticipated higher quarterly interest expenses in future periods[161] - The interest expense ratio, annualized, was reported at 6.6%, up from 6.3% in June[191] - The net interest margin ratio, annualized, increased to 11.7% from 6.7% in the previous quarter[191] - The company expects continued increases in operating expenses due to growth in receivables and inflationary pressures, particularly in salaries and benefits[171] Market Presence and Growth - As of September 30, 2024, the CAR subsidiary served over 670 dealers across 34 states and two U.S. territories, indicating significant market presence in the auto finance sector[152] - The company continues to pursue growth in the CaaS segment, leveraging technology solutions to support lenders in offering more inclusive financial services[141] - The company expects continued growth in managed receivables in 2024, despite initial restrictions due to tightened underwriting standards and regulatory changes[200] - The company plans to continue expanding its financial technology reach and grow private label credit and general purpose credit card receivables[231] - The company anticipates continued growth in the acquisition of general purpose credit card receivables during 2024 and into 2025[213] Regulatory and Risk Factors - The company is monitoring the impact of recent CFPB rules that limit late fees charged to consumers, which could affect its revenue[259] - The company faces substantial risks and uncertainties that could materially affect future financial conditions, including economic conditions, credit losses, and regulatory changes[258] - The company has expressed concerns regarding the adequacy of its allowances for credit losses and estimates of loan losses[259] - The company acknowledges the potential impact of security breaches on its operations and the unauthorized disclosure of confidential information[258] - The company is subject to competition from various sources providing similar financial products, which could impact its market position[259] Capital and Financing Activities - Cash flows from operations for the nine months ended September 30, 2024, were $346.8 million, an increase from $326.7 million in the same period of 2023[245] - Cash used in investing activities increased to $571.0 million for the nine months ended September 30, 2024, compared to $461.0 million in 2023, primarily due to increased investments in credit card receivables[245] - The company generated $225.3 million in financing activities during the nine months ended September 30, 2024, up from $101.2 million in 2023, largely due to the issuance of $130.8 million of 2029 Senior Notes[245] - The company expects to continue raising additional capital to fund acquisitions of credit card receivables portfolios and further stock repurchases[246] - The company entered into a Loan and Security Agreement with Dove for a senior secured term loan facility of up to $40.0 million, which was fully satisfied by issuing 400,000 shares of Series A preferred stock[255]

Core Insights - Atlanticus Holdings Corporation reported strong financial results for Q2 2024, with managed receivables increasing by 11.1% to $2.4 billion and total operating revenue rising by 8.6% to $315.6 million compared to Q2 2023 [2][6][10] - The company achieved a net income attributable to common shareholders of $18.0 million, or $0.99 per diluted share, reflecting a decrease of 4.4% from the previous year [18][25] - A significant partnership was announced with Synchrony, enhancing the company's position in the point-of-sale credit market and providing access to millions of declined applications annually [4][5] Financial and Operating Highlights - Managed receivables increased to $2.4 billion, with a net receivables growth of over $241.1 million from June 30, 2023 [8] - Total operating revenue for the quarter was $315.6 million, up from $290.8 million in the same quarter last year, marking an 8.6% increase [6][10] - The company served over 325,000 new accounts during the quarter, bringing the total to 3.6 million accounts [2][8] Management Commentary - The President and CEO expressed satisfaction with the company's consistent growth over fifty consecutive quarters in revenue, managed receivables, and serviced accounts, despite a moderation in consumer spending [3] - The company is optimistic about long-term growth opportunities in the second look point-of-sale market as prime providers reduce their presence [4] Revenue and Expenses - Interest expense rose significantly to $37.9 million, up 56.7% from $24.2 million in Q2 2023, primarily due to increased debt and borrowing costs [12][13] - Total operating expenses increased by 8.9% to $61.5 million, driven by higher servicing costs and inflationary pressures [16][17] Net Income and Shareholder Returns - Net income attributable to common shareholders decreased by 4.4% to $18.0 million, with diluted earnings per share at $0.99 [18][25] - The company repurchased 49,203 shares of common stock at a cost of $1.3 million during the quarter [19]

Financial Performance - Total operating revenue for the three months ended June 30, 2024, was $315,641,000, an increase of $24,890,000 (approximately 8.6%) from $290,751,000 in 2023[142] - Net income for the three months ended June 30, 2024, was $24,127,000, a decrease of $687,000 (approximately 2.8%) from $24,814,000 in 2023[142] - Total operating revenue for the six months ended June 30, 2024, was $605,815,000, an increase of $54,082,000 (approximately 9.8%) from $551,733,000 in 2023[143] - The net margin for the six months ended June 30, 2024, was $183,606,000, an increase of $8,840,000 (approximately 5.1%) from $174,766,000 in 2023[143] - Total operating revenue for the CaaS segment was $305.2 million for the three months ended June 30, 2024, an increase from $279.6 million in the previous quarter[172] Credit Losses and Provisions - Provision for credit losses for the six months ended June 30, 2024, was $(4,690,000), an increase of $3,677,000 (approximately 363.5%) from $(1,013,000) in 2023[143] - The provision for credit losses increased, particularly in the Auto Finance segment, with expectations for continued modest growth in 2024 due to anticipated growth in underlying receivables[150] - The combined principal net charge-off ratio is expected to decrease for the remainder of 2024, returning to historically normalized levels[193] - The combined principal net charge-offs for the three months ended June 30, 2024, were $154.1 million, compared to $168.0 million in the previous quarter, indicating a reduction of 8.8%[173] Interest and Expenses - Interest expense for the six months ended June 30, 2024, was $(73,011,000), an increase of $24,562,000 (approximately 50.7%) from $(48,449,000) in 2023[143] - Total operating expenses increased due to higher salaries and benefits costs, card and loan servicing expenses, and other variable costs associated with growth in receivables[153] - The interest expense ratio has increased throughout 2023 and 2024 due to rising federal funds borrowing rates[194] - The interest expense ratio, annualized, increased to 6.3% from 5.8% in the prior quarter[177] Receivables and Delinquency - Private label credit and general purpose credit card receivables increased to $2,414.7 million as of June 30, 2024, up from $2,173.4 million as of June 30, 2023, reflecting consistent quarterly growth[146] - Total managed receivables as of June 30, 2024, reached $2,415.1 million, up from $2,318.1 million in March 31, 2024, reflecting a growth of 4.2%[170] - The percentage of managed receivables 30-59 days past due was not specified, but the overall delinquency and charge-off data reflect the credit performance of managed receivables[175] - Delinquency rates for 30-59 days past due increased to 7.8% as of June 30, 2024, compared to 6.4% in the previous year[204] Cash Flow and Financing - The company generated $234.4 million in cash flows from operations for the six months ended June 30, 2024, compared to $209.8 million for the same period in 2023, reflecting an increase in finance and fee collections[230] - Cash used in investing activities increased to $264.8 million for the six months ended June 30, 2024, from $241.4 million in the prior year, primarily due to higher net investments in general purpose credit card receivables[230] - The company generated $53.8 million in cash from financing activities for the six months ended June 30, 2024, compared to a cash outflow of $7.2 million in the same period of 2023[230] Strategic Initiatives and Market Conditions - The company expects additional debt financing in the coming quarters to support growth, with anticipated increases in quarterly interest expense compared to prior periods[148] - Recent rules from the Consumer Financial Protection Bureau (CFPB) may adversely impact revenue from receivables, prompting the company to modify products and pricing strategies[146] - The company is exploring growth opportunities, including potential acquisitions and expansion into new markets[242] - The company continues to face risks related to economic conditions, credit losses, and regulatory changes that could materially affect future financial performance[243] Operational Efficiency - The company has experienced greater operating efficiency due to minimal increases in fixed costs despite significant growth in managed receivables over the past two years[154] - The company emphasizes account management strategies throughout the life of receivables, including credit line management and pricing based on risks[175] - The company has adequate dealer reserves to mitigate losses across the majority of its pool of receivables, despite recent increases in delinquency rates[210] Shareholder and Debt Management - The company plans to repurchase up to 2,000,000 shares of common stock and 500,000 shares of Series B preferred stock through June 30, 2026[231] - The company has moderate imminent refunding or refinancing risks associated with certain notes payable due within the next 24 months[219] - The company issued $57.2 million of 9.25% Senior Notes due 2029 in January and February 2024, with interest payable quarterly[222]

Wall Street expects a year-over-year decline in earnings on higher revenues when Atlanticus Holdings Corporation (ATLC) reports results for the quarter ended June 2024. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates.The stock might move higher if these key numbers top expectations in the upcoming earnings report. On the other hand, if they miss ...