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Nicholas Financial Inc. Message Board

  • dtejd1997 dtejd1997 Nov 2, 2012 12:24 PM Flag

    Now the wheels come off

    Hey all:

    NICK had terrible earnings! Everybody needs to sell before this thing goes to ZERO!

    Stock is down to $11.88/share. P/E is a lofty 6.5. Surely a company of NICK's quality & stature should be trading for a P/E of 3, possibly 4 at most.

    I think I'm going to sell and invest in AMZN instead.

    Who is with me?

    Sentiment: Strong Buy

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    • Well, the earnings were juiced in 2012 (at least relative to 2010-2011, that's as far back as I have gone) due to the lack of provision (other than dealer discount) for bad debt right? Looks to me like mid-cycle eps is around $1.20 (better than 2010 not as good as 2011, but with a small bump for growth). 10x mid cycle is okay but not screamingly cheap from where I sit relative to NICK's history (relative to competitors and the market, different story).

    • Your 6.5 P/E assumes EPS holds - It won't. My preliminary view is that EPS will likely go below 40c/q over the next 4 Qs. Expect provision to ramp back to 1MM soon. Could be worse if Manheim used car price index goes below 115.

      This should be no surprise though - Well telegraphed tough environment with a) Peter's Performance hurdles lowered for bonus (see proxy), b) CFO selling a few months back, c) Origination volume struggling due to white hot competition and d) Dealer Discount getting sacrificed.

      Peter needs to keep increasing the dividend to return capital to the shareholders. He won't though due to the unknown of the down cycle that the industry is entering.

      g/l NICKers!

      Spin

      • 1 Reply to spin.vestor
      • Both the cfo & peter were selling.

        Now we know why. I just wish I would have sold more.

        I sold some at $13.49 & previously at $12.99 & $11.99 but I guess I should have sold more.

        I wish they would make the dividend a "regular" dividend but they apparently dont.

        i didnt expect the stock to go down as much as it did.

        How can you be sure a down cycle is coming. Sure, competition has increased. But employment is better and people need their cars to get to work.

    • Hear Hear!
      :)

 
NICK
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