Over the next 6 years, Atlanticus Holdings shares will need to reach $55 to achieve average annual stock market performance of 9.0%. Atlanticus Holdings’ stock price will need to reach $65 by 2028 to achieve upper quartile performance. At the current price of $33, what are market expectations regarding Atlanticus Holdings’ future operating performance?
Executive Summary
- Price Target Research identifies Atlanticus Holdings as having: very high profitability, high expected growth, below average financial strength, and low stability. A big positive influence on Atlanticus Holdings’ valuation is its superior Risk Profile.
- Average valuation, above market shareholder returns. Current valuation levels are average relative to the Atlanticus Holdings Peer Group. Recent market returns have outperformed the Atlanticus Holdings Peer Group. Total shareholder returns expected to significantly beat the overall equity market. Based on current investor expectations, Atlanticus Holdings shares should reach a level of $236 by 2028 — an 38.7% per year total shareholder return. A 2028 stock price of $55 would reflect median performance and a price of $65 would be required to reach upper quartile performance.
- Atlanticus Holdings’ historical growth is modestly above average. Historical growth has been high relative to the Atlanticus Holdings Peer Group and forecasted growth is relatively very high. Equity Growth, and Asset Growth have been superior. Revenue Growth has lagged. Atlanticus Holdings’ historical income statement growth has been lower than balance sheet growth. Revenue growth has fallen short of asset growth; earnings growth has fallen short of equity growth driving erosion in return on equity.
- Return on Equity, and Pretax Margin are group leading. Asset Turnover is group lagging. The company has normal cash needs.
- Risk Profile has been Atlanticus Holdings’ biggest valuation strength. Atlanticus Holdings’ risk profile is very favorable. Overall variability has been very low with very low revenue variability, above average E.P.S. variability, and very high stock price volatility. Financial Strength is below average and earnings’ expectations are relatively very high. The debt/capital ratio has declined very significantly.
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