NICK Earns 29 Cents a Share

Earnings just came out and they’re outstanding:

Nicholas Financial, Inc. (Nasdaq:NICK – News) announced that for the three months ended June 30, 2010, net earnings, excluding change in fair value of interest rate swaps, increased 65% to $3,426,000 as compared to $2,081,000 for the three months ended June 30, 2009. Per share diluted net earnings, excluding change in fair value of interest rate swaps, increased 61% to $0.29 as compared to $0.18 for the three months ended June 30, 2009. See reconciliations of the Non-GAAP measures on page 2. Revenue increased 9% to $14,952,000 for the three months ended June 30, 2010 as compared to $13,694,000 for the three months ended June 30, 2009.
According to Peter L. Vosotas, Chairman and CEO, “We are pleased to report record 1st quarter revenue and earnings. Our results were primarily impacted by an increase in revenues, a reduction in the net charge-off rate and an increase in the cost of borrowed funds. During the first quarter we have added four branch offices to our 12 state branch network, bringing the total to 54 locations. The Company continues to evaluate additional markets for future branch locations and subject to market conditions, could open additional branch locations during the year. The Company remains open to acquisitions should an opportunity present itself.”

I knew NICK was doing well but these results are even better than what I expected. Here are the estimates I made earlier:
Receivables: $235 million to $240 million
Gross yield: 24% to 25%
Interest Expense: 3% to 4%
Provision for Credit Losses: 4%, maybe less
Pre-Tax Yield: 9%
And here are the results:
Receivables: $238.3 million
Gross yield: 25.08%
Interest Expense: 2.58%
Provision for Credit Losses: 2.68%
Pre-Tax Yield: 9.43%
A few months ago, I said that NICK could earn $1.10 a share this calendar year (the fiscal year ends in March, I used calendar year simply for market comparison).
That must have seemed wildly optimistic but now it seems easy. NICK has made 57 cents a share for the first six months of this year. The stock’s book value is up to $8.57.
Here’s something to think about: NICK’s net yield and pre-tax yield are the highest since Q2 of 2007. Also, the provision for credit losses is the lowest since then. The major difference is that receivables are now 28% higher and net revenues are 27% higher.
So the stock is 27% higher, right? No! NICK was as high as $12.55 in May 2007!

Posted by on July 29th, 2010 at 10:34 am


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.