The Collection House Ltd (ASX: CLH) share price fell 5% today, following the release of its half-year profit report.
Here are the key takeaways from the debt collectors half-year to 31 December 2016:
- Net profit fell 2% to $8.2 million
- Revenue rose 2% to $66 million
- A fully franked dividend of 3.9 cents per share was declared
- Contracted Purchased Debt Ledger (PDL) acquisitions totalled $52.1 million
Collection House shares fell 10% in the month leading into today's announcement, however, the result does not appear that bad.
The company's Collection Services business reported strong revenue growth and flat profits. The division recently on-boarded Cash Converters International Ltd (ASX: CCV) as a client and won the contract for Transurban Group (ASX: TCL).
The PDL segment saw lower interest income. Collection House said the market remains competitive but it is showing signs of easing.
Looking ahead, the company expects to report profit between $19.4 million and $20 million over the full year. That would put its shares on a price-earnings ratio of around 8.5 times and a dividend yield of 6.3% fully franked if it declares a 3.9 cents per share dividend in the second half.
Should you buy Collection House?
Today's profit result, while lower than that from the same period last year, appears decent. Until recently, I think Collection House was run only to profit its management in the short-term.
Right now, the company's shares look cheap and potentially offer a handy dividend yield. However, I'm going to watch this one from the sidelines for a little while longer.
