Dollar Financial Earnings: Here’s Why the Stock is Down Now

Dollar Financial Corp. (NASDAQ:DLLR) delivered a profit and beat Wall Street’s expectations, BUT came up short on beating the revenue expectation. The revenue miss is a negative sign to shareholders seeking high growth out of the company. Shares are down 0.08%.

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Dollar Financial Corp. Earnings Cheat Sheet

Results: Adjusted Earnings Per Share decreased 54.72% to $0.24 in the quarter versus EPS of $0.53 in the year-earlier quarter.

Revenue: Rose 5.04% to $283.6 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Dollar Financial Corp. reported adjusted EPS income of $0.24 per share. By that measure, the company beat the mean analyst estimate of $0.22. It missed the average revenue estimate of $285.9 million.

Quoting Management: “As we previously reported, our financial results for the fiscal third quarter were significantly impacted by the transition to the new responsible lending guidelines in the United Kingdom, which were developed in consultation with the local regulatory authorities and our industry association members,” said Jeff Weiss, the Company’s Chairman and Chief Executive Officer. “As a result of the temporary ‘credit crunch’ for customers with multiple loans, which was caused by adhering to these new guidelines, we experienced higher loan defaults in our U.K. business during the fiscal third quarter, clearly affecting our bottom line. In response, we further tightened our lending underwriting criteria to minimize the risk to our business, which naturally reduced our loan growth in the United Kingdom during this period. Despite these issues, strong demand for consumer loans across our geographies enabled our overall consolidated loan portfolio during the fiscal third quarter to increase 13.7% from the prior-year period. We have begun to see moderate sequential quarter growth in our unsecured loan book in the United Kingdom as we began the fiscal fourth quarter.”

Key Stats (on next page)…

Revenue decreased 3.18% from $292.9 million in the previous quarter. EPS decreased 57.14% from $0.56 in the previous quarter.

Looking Forward: Analysts have a more negative outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has fallen from a profit of $0.75 to a profit $0.47. For the current year, the average estimate has moved down from a profit of $2.43 to a profit of $1.71 over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Email any earnings discrepancies to earnings [at] wallstcheatsheet.com)

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