The Credit Corp Group Limited (ASX: CCP) share price is flying higher today following the company's acquisition of Radio Rentals.
At the time of writing, the receivables management company's shares are up 8.41% to $32.75. It's worth noting that its shares have strongly rebounded after dipping below the $30 mark yesterday, a monthly low.
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Credit Corp accelerates growth strategy
Investors are driving up the Credit Corp share price after the company announced the takeover of Australia's favourite rental company.
In its release, Credit Corp advised that it has entered into a binding agreement to acquire Radio Rentals from Thorn Group Ltd (ASX: TGA).
The purchase price for the appliance leasing business is valued at around $60 million. Credit Corp will tap into its existing cash reserves to fund the acquisition. The purchase is subject to final adjustments and is expected to be completed sometime next month.
Credit Corp CEO, Thomas Beregi commented on the newly acquired business:
Credit Corp provides the cheapest and most sustainable finance to the Australian credit impaired consumer market and our entry into this new segment will be consistent with that approach.
As a result of the newly acquired business, Credit Corp revised its earnings guidance for the 2022 financial year.
The company is forecasting purchased debt ledger (PDL) acquisitions to come in the range of $280 million to $300 million. In comparison, Credit Corp had previously projected $220 million to $240 million for PDL acquisitions.
Furthermore, net lending volumes are anticipated to remain the same, between $45 million and $55 million.
The company's bottom line, net profit after tax (NPAT) is estimated to lift to $92 million and $97 million. Earlier this month, it assumed NPAT would be about $85 million to $95 million.
Lastly, earnings per share (EPS) is expected to stand at 137 cents to 144 cents. This is an increase from the 126 cents to 141 cents the company originally predicted.
Credit Corp share price summary
Over the past 12 months, Credit Corp shares have gained almost 35%, with year-to-date up around 10%. The company's share price reached a 52-week high of $34.48 in February, before treading sideways in the following months.
Credit Corp presides a market capitalisation of roughly $2.2 billion, with approximately 67.83 million shares on its registry.
