Guess which ASX 200 share dropped then popped on a 30% profit dive

The company has maintained its FY23 profit guidance despite the first half's tumble.

| More on:
People sit in rollercoaster seats with expressions of fear, terror and exhilaration as it goes into a steep downward descent representing the Novonix share price in FY22

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • The Credit Corp share price tumbled as much as 10% on Wednesday before posting a recovery
  • The stock is currently trading 0.51% higher at $21.75
  • Its rollercoaster ride follows the release of the company's first-half earnings, detailing a 30% drop in profits

The share price of S&P/ASX 200 Index (ASX: XJO) consumer debt business Credit Corp Group Limited (ASX: CCP) plummeted this morning after the company revealed a major profit hit.

The Credit Corp share price fell 2.6% on open to $21.09 before plunging further to its intraday low of $19.64 – marking a 10.2% dive.

Interestingly, it has since bounced back to trade at $21.75 at the time of writing, 0.51% higher than its previous close.

ASX 200 financials share wobbles as profits fall 30%  

Here are the key takeaways from Credit Corp's earnings for the first half:

  • Post-tax profits tumbled 30% on the prior comparable period (pcp) to $31.8 million
  • Revenue lifted 8% to $220.5 million
  • Earnings per share (EPS) fell 31% to 46.9 cents
  • Customer loan book grew 32% to $331 million
  • Dividend slashed by 40% to 23 cents per share

While a lot of its first-half earnings look dire, the company's consumer lending segment remains on track to post record full-year earnings.

Its profits tumbled due to up-front loss provisioning and marketing expense from rapid loan book growth; costs from increased United States resourcing; and run-off in the core Australia/New Zealand debt buying segment.  

What else happened last half?

The first half was a period of growth for the ASX 200 company.

Its loan book growth was born from its Wallet Wizard unsecured cash loan product. Strong demand brought a record $201 million of lending last half while the company maintained credit standards and rationed the volume of longer-duration auto loans.

What did management say?

CEO of Credit Corp Thomas Beregi commented on the news driving the ASX 200 company's share price today, saying:

Wallet Wizard credit settings remain conservative and short durations coupled with relatively small loan sizes will contain risk should economic conditions deteriorate.

US charge-off volumes are growing and increased resourcing will enable Credit Corp to service recent and future purchases, growing collections and earnings over the medium term.

What's next?

The remainder of financial year 2023 looks like it could be better for Credit Corp. The company expects an earnings recovery in the second half, mainly due to its consumer lending segment.

Its full-year profit is tipped to come in between $90 million and $97 million while EPS is forecast to end up between $1.33 and $1.43.

It's also bolstered its purchased debt ledger acquisition guidance to between $290 million and $295 million and its net lending volumes guidance to between $140 million and $150 million.

Credit Corp share price outperforms ASX 200 in 2023

Today's tumble included, the Credit Corp share price has posted a notable 14% gain so far this year. That's compared to the ASX 200's 8% rise.

Looking further back, however, the stock has fallen 40% over the last 12 months while the index has lifted 7%.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Earnings Results

Photo of two women shopping.
Earnings Results

Premier Investments share price jumps 9% on results and demerger plans

The Smiggle and Peter Alexander owner has released its results. How did it perform?

Read more »

A man holds his hand under his chin as he concentrates on his laptop screen and reads about the ANZ share price
Earnings Results

Soul Patts share price struggles on falling profits

ASX 200 investment house Soul Patts reported its half year results this morning.

Read more »

a biomedical researcher sits at his desk with his hand on his chin, thinking and giving a small smile with a microscope next to him and an array of test tubes and beackers behind him on shelves in a well-lit bright office.
Earnings Results

Chemist Warehouse merger target Sigma reports 149% FY24 profit jump

This could be the last set of results from Sigma as we know it if its merger is approved.

Read more »

A man holds his head in his hands, despairing at the bad result he's reading on his computer.
Earnings Results

Brickworks share price tumbles on disappointing half-year loss

This loss didn't stop the company from increasing its dividend again.

Read more »

A man sits on a bench atop a mountain with a laptop, making investments with a green ESG mind.
Earnings Results

ASX All Ords stock KMD tumbles as interim dividend cancelled

Investors are hitting the sell button on ASX All Ords stock KMD today.

Read more »

Coal miner holding a giant coal rock in his hand making a circle with his hand, symbolising a rising share price.
Energy Shares

New Hope share price charges higher despite profit crunch and huge dividend cut

Weaker coal prices have hit this miner's profits and dividend hard.

Read more »

A Chinese investor sits in front of his laptop looking pensive and concerned about pandemic lockdowns which may impact ASX 200 iron ore share prices
Earnings Results

Liontown share price tumbles 7% on half-year results

This lithium developer's results have been released this afternoon.

Read more »

A man in a hard hat and high visibility vest holds his thumb up in a gesture of confidence with heavy moving equipment in the background as on a mine site as the Chalice Mining share price rises today.
Earnings Results

Sayona Mining share price jumps despite $32m half-year loss

The Sayona Mining Ltd (ASX: SYA) share price is pushing higher on Thursday. At the time of writing, the lithium…

Read more »