Home Stocks World Acceptance Corp (WRLD) Downgraded After Poor Earnings

World Acceptance Corp (WRLD) Downgraded After Poor Earnings

When you purchase through our sponsored links, we may earn a commission. By using this website you agree to our T&Cs.

A popular short bet is likely paying off for some hedge funds.

Yesterday, World Acceptance Corp released their fiscal first quarter earnings that showed core earnings per share come in at $2.44, on revenue of $137.2 million.  Wall Street consensus was core earnings per share of $2.56, on revenue of $142.5 million.  BMO Capital Markets analysts had core earnings per share estimates of $2.61 for the quarter.  Shares of World Acceptance Corp. dove -11.31% by the time the closing bell sounded on Wednesday.  Today, BMO Capital Markets revised and updated their equity research stance on the company.  While analysts left World Acceptance Corp at a “market perform” rating, analysts cut their price target from $83 to $48, implying a return of -7% from current price of $51.37.

World Acceptance Corp

BMO lowers 2016 and 2017 full year earnings estimates

Aside from the target price cut, BMO analysts revised earnings estimates for 2016 and 2017 lower.  BMO Capital Markets now estimates that World Acceptance Corp will see full year earnings per share of $10.50 in 2016, down from $11.45 or -8%.  In 2017, BMO sees earnings come in at $8.97 for full year, down from $12.34 or -27%. BMO analyst, James Fotheringham says that the reasoning for the bearish views on World Acceptance has to do with the perceived idea that World Acceptance will not open any share repurchasing programs and significant growth challenges in the consumer credit industry.  Additionally, World Acceptance still has regulatory issues from March 2014 with the CFPB to resolve, which could further result in heavy fines.

FBR & Co. slash estimates for World Acceptance

Aside from BMO Capital Market’s downgrade and earnings revision, FBR & Co. also released an updated research report today on World Acceptance.  While FBR & Co. maintained their “market perform” rating, they slashed price target from $64 to $55, is roughly 7% above today’s price.  FBR & Co. had just recently downgraded World Acceptance roughly a month ago, on June 25th.  Around that time, World Acceptance was still trading around $66.73 and FBR & Co. slashed rating from “outperform” to “market perform” and cut price target from $98 to $73.  Essentially, in the last month, price target has dropped from $98 to $55 at FBR & Co., representing a -78% reduction in just one month.

Overall, World Acceptance Corp is getting no love from Wall Street.  Analysts are extremely bearish on the consumer finance company and their outlook continues to reflect that bearish sentiment.  Additionally, with CEO and a SVP leaving the company, further uncertainty sets in, as a successor must be named.  Overall, World Acceptance Corp. looks to have a rough patch ahead.

Disclosure: None

Our Editorial Standards

At ValueWalk, we’re committed to providing accurate, research-backed information. Our editors go above and beyond to ensure our content is trustworthy and transparent.

Business

Chinese Stocks Jump on Promise of “Moderately Loose” Monetary Policy

David Moadel7 hours

The newly-announced measures mark a significant tonal shift in Chinese monetary policy Shares of Alibaba (NYSE:BABA), JD.com (NASDAQ:JD), Baidu (NASDAQ:BIDU), and other Chinese stocks rallied sharply Monday morning after the Chinese government announced stimulus measures to...

Want Financial Guidance Sent Straight to You?

  • Pop your email in the box, and you'll receive bi-weekly emails from ValueWalk.
  • We never send spam — only the latest financial news and guides to help you take charge of your financial future.