Why Capital One, LendingTree, and World Acceptance Are Rising This Week

What happened

Shares of many credit card and lenders rose this week, mainly due to the market’s positive earnings report.

For weeks, shares of Capital One Financial (COF -0.02%) sold 11% higher as the market closed Thursday, according to data from S&P Global Market Intelligence.

Market share of online lending Tree Lending (Tree 12.65%) sold 16.6% higher and shares of the low-dollar lender Welcome to the world (WRLD 33.94%) is higher than 35%.

so what

Capital One reported earnings per share of $3.03 for the quarter on total revenue of more than $9 billion, both of which missed consensus estimates.

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Net bad debt, or uncollectible debt and a good indicator of actual loan losses, jumped 54% from the third quarter. The 30-plus day delinquency rate went from 2.78% in the third quarter to 3.21% in the fourth quarter. Capital One also added about $1 billion to its allowance for credit losses.

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Keep in mind that investors may be in favor of this because it comes in the form of income, the product is being traded cheaply and Capital One lends to lenders. money than his peers, which is part of the people who have seen his money improve. away from the circle. More than 31% of Capital One credit card borrowers had FICO scores below 660 in the fourth quarter.

Global Bonds, which provides short- and medium-term loans, also reported earnings this week. It posted earnings per share of $0.98 on total revenue of $146.5 million. Revenue beat estimates for the quarter, while revenue fell short.

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The company showed a high net acceptance rate in the fourth quarter of 25%, which means that it can help borrowers with credit types, but the rate was lower from 23% in the third quarter of age. The delinquency rate fell in the quarter to 11.1%. The global deal has generated operating income of more than $203 million in the past nine months, which is 21% more than the same period in 2021.

I haven’t seen any news about LendingTree but with the stock down more than 70% in the past year it may be compounded by the financial information of other similar companies.

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Now what

Of this group, I only like Capital One. The company has an experienced management team and I am sure that the management will be kept conservatively regardless of the economic situation that will come this year. As the year progresses and interest rates are expected to rise quickly, the bank will be able to move its loans higher. The assessment does not require much.

I have no interest in international recognition because I think that the customer it serves can be easier than compensation, especially if unemployment rises more than expected.

I’m not very interested in LendingTree because I believe it will likely see less demand in its market due to the high interest rate environment.


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