One Automotive Lender’s Quarterly Results Impress Analysts

Investors today have countless opportunities to look into, and that can feel a bit overwhelming. In many cases, however, there are a few clear standouts for investors who wish to back and become involved in certain types of business.

In the field of consumer lending, for example, many of the success stories of recent years have come from companies that buy up automotive loans and securitize them for sale on the relevant markets. As the most recent earnings report from Consumer Portfolio Services (CPS) has made clear to many investors, even steadily growing competition in this space has not inhibited the ability of the top performers to produce profits.

With the Industry Maturing, Pioneers in the Field are Still Doing Very Well

CPS has been in this business for decades now, and the nature of the environment has changed greatly over the course of that span. Even so, the company has managed to record profits every fiscal year for the last 26, an achievement that businesses in any industry would be proud of.

Although its earnings per share slipped a bit relative to the record-setting year preceding, CPS once again impressed analysts and investors with its most recent quarterly financial report. Some had assumed that a heightened level of competition would present enough pressure that profits would drop more significantly.

Instead, a careful, determined focus on value and the realities of the secondary markets allowed CPS to remain largely within its performance band of recent years. Charge-offs within the company’s loan portfolio did tick up slightly compared to the year before, but this had been largely expected.

At the same time, demand for the securities into which CPS packages its loans was higher than even the most optimistic observers had dared to hope. Combined with plenty of fiscal discipline and strategic thinking, that allowed the leaders of CPS to keep profits high even in the face of burgeoning competition.

A Bright Future for Many Lenders

As a result, investors increasingly expect that companies like CPS will continue faring well even as interest rates continue to rise. That is good news for many who are interested in investing into this increasingly important type of business themselves.