Propel Holdings Inc T.PRL

Ink Research 2

[retiredcf]

Morning Report: Can Propel Holdings climb to new heights?

April 2, 2024

The share price of Propel Holdings (PRL) gained altitude since we featured it here on July 18, 2023. The stock is up 87.8% since the report, setting an all-time high of $18.44 on February 29th. Since the beginning of March, the stock has experienced some turbulence as investors fretted about persistently high interest rates and assessed the implications of Propel's 2023 earnings report. Propel focuses on providing lending products to credit-challenged consumers, primarily in the US. On March 12th, it reported that net income had increased by 84% to US$27.8 million for fiscal 2023 and by 68% to US$8.5 million in Q4.

Earnings growth was helped by a 36% Q4 jump in ending combined loans and advance balances (CLAB) to a record US$$337.3 million. That helped push revenue for the year to US$316.5 million, up 40% from 2022. Provision for loan losses and other liabilities (PLOL) rose just under 35% to $161.9 million. Q4 revenue was up 54% to $96.0 million while PLOL was up just over 56% to just over $51.3 million. Despite rebounding in Q4, its Annualized Revenue Yield (revenue/average CLAB) fell in 2023 to 114% from 123% a year earlier. Propel expects this metric may continue to decline in 2024 due to a variety of factors including higher loan amounts being extended to returning customers who often qualify for better rates and new customers with stronger credit risk profiles and higher incomes who may receive better pricing. How this mix of stronger-credit clients and continued Federal Reserve tightening plays out remains to be seen. Propel remains generally upbeat and expects 2024 CLAB to rise by a midpoint of 30%. However, we have seen some insider selling this month which has helped to knock the stock down our rankings a notch to Mostly Sunny.

[ssnowdday]

Thanks, very interresting.  Keep us posted on that!