World Acceptance Corp (NASDAQ: WRLD)

Sector: Financial Services Industry: Credit Services CIK: 0000108385
Market Cap 727.96 Mn
P/B 2.07
P/E 17.02
P/S 1.27
ROIC (Qtr) 8.64
Div Yield % 0.00
Rev 1y % (Qtr) 1.89
Total Debt (Qtr) 751.93 Mn
Debt/Equity (Qtr) 2.14
Add ratio to table...

About

World Acceptance Corporation (WRLD) is a prominent player in the United States' small-loan consumer finance services industry. Established in 1962, the company has grown to become one of the largest in its sector, with a significant presence in the southeastern and midwestern regions of the country. It operates 1,048 branches across 16 states, offering a variety of financial products and services. WRLD's primary source of revenue comes from the origination of new loans, with interest and fee income accounting for a significant portion of its total...

Read more

Investment thesis

Bull case

  • Operating cash flow of 255.71M provides strong 18.99x coverage of stock compensation 13.46M, indicating sustainable incentive practices.
  • Robust free cash flow of 252.91M exceeds capital expenditure of 2.80M by 90.23x, indicating strong organic growth funding capability.
  • Strong free cash flow of 252.91M provides 0.88x coverage of SG&A expenses 286.33M, indicating efficient cost management.
  • Retained earnings of 76.15M provide strong 6.17x coverage of intangibles 12.35M, indicating quality earnings retention.
  • Free cash flow of 252.91M provides solid 1.37x coverage of operating expenses 184.80M, showing operational efficiency.

Bear case

  • Operating cash flow of 255.71M barely covers its investment activities of (206.14M), with a coverage ratio of -1.24, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 255.71M is outpaced by equity issuance of (123.43M) (-2.07 ratio), indicating concerning reliance on equity markets for funding operations.
  • R&D investment of 0 represents just 0x of SG&A expenses of 286.33M, indicating potential underinvestment in innovation relative to administrative overhead.
  • Cash position of 42.21M provides only 0.88x coverage of interest expenses of 47.95M, indicating potential refinancing risks in a rising rate environment.
  • Cash position of 42.21M provides minimal 0.15x coverage of SG&A expenses of 286.33M, indicating potential operational inflexibility in market downturns.

Peer comparison

Companies in the Credit Services
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 V Visa Inc. 877.17 Bn 208.55 89.23 21.18 Bn
2 MA Mastercard Inc 642.42 Bn 214.79 82.20 19.00 Bn
3 AXP American Express Co 398.94 Bn 79.20 13.57 57.76 Bn
4 COF Capital One Financial Corp 100.60 Bn 29.83 5.26 51.48 Bn
5 PYPL PayPal Holdings, Inc. 39.11 Bn 7.47 1.18 9.99 Bn
6 SYF Synchrony Financial 36.32 Bn 11.32 4.24 15.18 Bn
7 SOFI SoFi Technologies, Inc. 22.36 Bn 46.45 6.19 1.92 Bn
8 ALLY Ally Financial Inc. 13.05 Bn 47.46 1.66 20.63 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.20 1.15
EV to Cash from Ops. EV/CFO 5.37 13.47
EV to Debt EV to Debt 1.83 3.05
EV to EBIT EV/EBIT 13.42 -258.42
EV to EBITDA EV/EBITDA 12.31 -60.09
EV to Free Cash Flow [EV/FCF] EV/FCF 5.43 15.18
EV to Market Cap EV to Market Cap 1.89 11.30
EV to Revenue EV/Rev 2.39 14.62
Price to Book Value [P/B] P/B 2.07 4.87
Price to Earnings [P/E] P/E 17.02 21.22
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 2.61
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 -4.41
Dividend per Basic Share Div per Share (Qtr) 0.00 0.75
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 5.28
Interest Coverage Int. cover (Qtr) 2.13 -72.18
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 27.13 -80.62
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 170.91 12.15
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 6.19
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -29.53 -32.47
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -29.06 -5.45
EBIT Growth (1y) % EBIT 1y % (Qtr) -30.29 12.05
EBT Growth (1y) % EBT 1y % (Qtr) -47.47 -22.99
EPS Growth (1y) % EPS 1y % (Qtr) -45.30 -101.12
FCF Growth (1y) % FCF 1y % (Qtr) 3.97 143.56
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 2.61 8.09
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.50 0.25
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.11
Cash Ratio Cash Ratio 0.00 0.31
Current Ratio Current Ratio 0.00 0.88
Debt to Equity Ratio Debt/Equity (Qtr) 2.14 5.21
Interest Cover Ratio Int Coverage (Qtr) 2.13 -72.18
Times Interest Earned Times Interest Earned (Qtr) 2.13 -72.18
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 19.50 -19.26
EBIT Margin % EBIT Margin % (Qtr) 17.84 -7.08
EBT Margin % EBT Margin % (Qtr) 9.48 -29.92
Gross Margin % Gross Margin % (Qtr) 100.00 74.15
Net Profit Margin % Net Margin % (Qtr) 7.50 -44.14