For traders and investors interested in an undervalued play in the technology-enhanced financial services space, Atlanticus Holdings Corp (NASDAQ: ATLC) may be worth a long look right now. The stock trades on a tiny float (well under 5 million shares) and recently secured a major new source of funding to power new expansion.
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The company just announced new financial results that could be game-changing for the stock. The data includes 3 and 6 months periods covering Q1 and Q2 for 2018. The results show a jump from net loss to net income, with net income accelerating in Q2, when compared to results from a year ago. We will get into the details below, but we should first get to know this company a bit better.
Atlanticus Holdings Corp (NASDAQ: ATLC) bills itself as a company that provides credit and related financial services and products to financially underserved consumer credit market in the United States. It operates in two segments, Credit and Other Investments, and Auto Finance.
The balance sheet is healthy, with more cash than debt. And revenues are growing strong on a sequential Q/Q basis. Overall, ATLC is pulling in trailing 12-month revenues of $157M with major top-line growth (y/y quarterly revenues growing at 51.2%).
The Credit and Other Investments segment originates a range of consumer loan products, such as retail credit, personal loans, and credit cards through various channels, including retail point-of-sale, direct mail solicitation, Internet-based marketing, and partnerships with third parties; and offers point-of-sale financing by partnering with retailers and service providers to provide credit to their customers for the purchase of various goods and services.
This segment also invests in and services portfolios of credit card receivables. In addition, this segment offers loan servicing, such as risk management and customer service outsourcing for third parties; and engages in testing and investment activities in consumer finance technology platforms.
The Auto Finance segment purchases and/or services loans secured by automobiles from or for a pre-qualified network of independent automotive dealers and automotive finance companies in the buy-here, pay-here, and used car business. This segment also provides floor plan financing and installment lending products.
The company was formerly known as CompuCredit Holdings Corporation and changed its name to Atlanticus Holdings Corporation in November 2012. Atlanticus Holdings Corporation was founded in 1996 and is headquartered in Atlanta, Georgia.
Data Confirms a Promising Trend
As noted above, the company reported powerful growth underway so far this year, with three and six months ended June 30, 2018 GAAP net income attributable to controlling interests of $5.6 million and $960,000, respectively, or $0.41 and $0.07 per fully diluted common share, respectively.
As far as comparables, this data compares to three and six months ended June 30, 2017, GAAP net loss attributable to controlling interests of $(8.8) million and $(8.1) million, respectively, or $(0.63) and $(0.58) per fully diluted common share, respectively.
That’s a tremendous turnaround. And with the company’s recently secured major credit facility (pushing another $190M in financial flexibility to the company as of late June), the future here could be quite bright.
For traders, it is also worth noting that the stock trades on a tiny float of under 5 million shares.
“We are very pleased with both the performance of our Fortiva branded retail and credit card assets and our Auto Finance segment assets, both of which continue to deliver attractive returns and provide a continued avenue for significant growth. Our recent closing of a $100 million revolving credit facility coupled with $50 million in unrestricted cash provides us with the means to continue our growth,” said Jeff Howard, President of Atlanticus.
