AmeriCredit Beats Goals, Guides Down

Fiscal 2006 will be hit by rising loss provisions, the auto lender says.
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Subprime lender

AmeriCredit

(ACF)

sailed past third-quarter targets Monday but warned that fiscal 2006 earnings will be hit by rising loan losses.

The Fort Worth, Texas, car lender earned $75.6 million, or 46 cents a share, for the quarter ended March 31. That's up from the year-ago $63.8 million, or 38 cents a share. Revenue surged 19% from a year ago to $371 million.

Those numbers easily exceeded the Thomson First Call analyst consensus estimate, which called for earnings of 36 cents a share on revenue of $327 million.

AmeriCredit said it expects fourth-quarter numbers to match third-quarter levels, which again would handily exceed the Wall Street estimate. But the company said it would target 20% loan growth for the following year, which would result in higher loan-loss provisions and hold earnings down to a range of $1.60-$1.76 a share. Wall Street was expecting $1.78.

"We expect AmeriCredit's managed portfolio balance and earnings to be relatively flat throughout calendar year 2005," said President Dan Berce. "We are, however, forecasting growth of approximately 20% in new loan volume for our next fiscal year. As a result, we will incur significant loan loss provisions related to these higher levels of new loan volume. Our investments in increased new loan production today position us to achieve growth in our portfolio and our earnings in calendar year 2006 and beyond."

AmeriCredit rose 40 cents Monday to $23.18.