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NEW YORK (TheStreet) -- World Acceptance/De (WRLD) has been downgraded by TheStreet Ratings from Buy to Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate WORLD ACCEPTANCE CORP/DE (WRLD) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and a generally disappointing performance in the stock itself."
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Highlights from the analysis by TheStreet Ratings Team goes as follows:
- WRLD's revenue growth has slightly outpaced the industry average of 0.1%. Since the same quarter one year prior, revenues slightly increased by 3.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
- WORLD ACCEPTANCE CORP/DE has improved earnings per share by 17.1% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, WORLD ACCEPTANCE CORP/DE increased its bottom line by earning $9.17 versus $7.94 in the prior year. This year, the market expects an improvement in earnings ($10.68 versus $9.17).
- Despite the current debt-to-equity ratio of 1.93, it is still below the industry average, suggesting that this level of debt is acceptable within the Consumer Finance industry.
- The gross profit margin for WORLD ACCEPTANCE CORP/DE is currently lower than what is desirable, coming in at 28.96%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 15.00% trails that of the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Consumer Finance industry average. The net income has decreased by 2.4% when compared to the same quarter one year ago, dropping from $23.11 million to $22.56 million.
- You can view the full analysis from the report here: WRLD Ratings Report