shares were slipping Thursday, even though the company posted strong earnings.
The company beat second-quarter profit estimates by a penny, as net income rose to $8.1 million, or 12 cents a share, from $900,000, or 2 cents a share, in the year-ago period. Revenue rose to $45.9 million from $21 million in the second quarter of 2002.
But following the report, E-Loan shares were down 57 cents, or 9%, at $5.77 on volume of eight million shares, four times its average trading volume. The share drop apparently was related to investors' concerns that an expected drop in home refinancing will hurt the consumer lender's business next year.
"The story is not this year. It's actually refinancing activity, which is expected to decline going into 2004, and could lead to lower earnings then," said Todd Halky, an analyst at Putnam Lovell.
Halky said refinancing volume was very robust this year, but "while the company has done an excellent job in increasing its revenue, it won't be enough to offset the decline in refinancing."
E-Loan raised its full-year 2003 guidance, but kept the number slightly below analysts' estimates. The lender now expects to earn $25.1 million this year, or 37 cents a share, 2 cents below Wall Street projections of 39 cents a share, according to Thomson First Call. It also predicted revenue will grow to $165 million, above analysts' estimates of $159 million.
The company didn't provide any guidance for 2004 results.