As the Q2 earnings season wraps, let’s dig into this quarter’s best and worst performers in the personal loan industry, including FirstCash (NASDAQ: FCFS) and its peers.
Personal loan providers offer unsecured credit for various consumer needs. The sector benefits from digital application processes, increasing consumer comfort with online financial services, and opportunities in underserved credit segments. Headwinds include credit risk management in unsecured lending, regulatory oversight of lending practices, and intense competition affecting margins from both traditional and fintech lenders.
The 9 personal loan stocks we track reported an exceptional Q2. As a group, revenues beat analysts’ consensus estimates by 4.9% while next quarter’s revenue guidance was 1.5% below.
Thankfully, share prices of the companies have been resilient as they are up 8.8% on average since the latest earnings results.
FirstCash (NASDAQ: FCFS)
Offering a financial lifeline to the unbanked and credit-constrained since 1988, FirstCash (NASDAQ: FCFS) operates pawn stores across the U.S. and Latin America while also providing retail point-of-sale payment solutions for credit-constrained consumers.
FirstCash reported revenues of $830.6 million, flat year on year. This print exceeded analysts’ expectations by 1%. Overall, it was a strong quarter for the company with a beat of analysts’ EPS and EBITDA estimates.
Mr. Rick Wessel, chief executive officer, stated, “FirstCash is pleased to report outstanding earnings results for the second quarter and year-to-date periods. Pawn demand remains extremely robust, with local currency same-store pawn receivables up 13% in both the U.S. and Latin America, driving strong earnings growth for both segments. AFF posted growth in originations for the second quarter and a segment earnings increase of 46% versus last year. Driven by strong cash flows, the Board of Directors increased the quarterly cash dividend by 11%, which further reflects the strength of our business and long-term earnings prospects.”
FirstCash delivered the slowest revenue growth of the whole group. Interestingly, the stock is up 8.2% since reporting and currently trades at $144.53.
Is now the time to buy FirstCash? Access our full analysis of the earnings results here, it’s free.
Best Q2: LendingClub (NYSE: LC)
Pioneering peer-to-peer lending in the US before evolving into a digital bank, LendingClub (NYSE: LC) operates a marketplace that connects borrowers with lenders, offering personal loans, auto refinancing, and banking services.
LendingClub reported revenues of $248.4 million, up 32.7% year on year, outperforming analysts’ expectations by 9.2%. The business had an incredible quarter with a beat of analysts’ EPS and EBITDA estimates.
The market seems happy with the results as the stock is up 31.3% since reporting. It currently trades at $17.25.
Is now the time to buy LendingClub? Access our full analysis of the earnings results here, it’s free.
Nubank (NYSE: NU)
With nearly 94 million customers across Brazil, Mexico, and Colombia through its viral member-get-member referral program, Nubank (NYSE: NU) is a digital banking platform that offers financial services including spending, saving, investing, borrowing, and protection products to millions of customers across Latin America.
Nubank reported revenues of $2.64 billion, up 20.8% year on year, exceeding analysts’ expectations by 1.3%. It was a satisfactory quarter as it also posted EPS in line with analysts’ estimates.
Interestingly, the stock is up 32.2% since the results and currently trades at $15.86.
Read our full analysis of Nubank’s results here.
Enova (NYSE: ENVA)
Pioneering online lending since 2004 with a massive database of over 65 terabytes of customer behavior data, Enova International (NYSE: ENVA) provides online financial services including installment loans and lines of credit to non-prime consumers and small businesses in the United States and Brazil.
Enova reported revenues of $764 million, up 21.6% year on year. This number surpassed analysts’ expectations by 0.9%. It was a strong quarter as it also recorded a solid beat of analysts’ EBITDA estimates and a beat of analysts’ EPS estimates.
Enova had the weakest performance against analyst estimates among its peers. The stock is up 8.2% since reporting and currently trades at $121.
Read our full, actionable report on Enova here, it’s free.
Sezzle (NASDAQ: SEZL)
Founded in 2016 as an alternative to traditional credit cards for younger shoppers, Sezzle (NASDAQ: SEZL) provides a payment platform that allows consumers to split purchases into four interest-free installments over six weeks at participating retailers.
Sezzle reported revenues of $98.7 million, up 76.4% year on year. This result beat analysts’ expectations by 4%. It was an exceptional quarter as it also logged a beat of analysts’ EPS estimates.
Sezzle delivered the fastest revenue growth among its peers. The stock is down 36.8% since reporting and currently trades at $88.23.
Read our full, actionable report on Sezzle here, it’s free.
Market Update
As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.
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