Is anyone else in the StockCentral community following this stock?  Toolkit gives me a 43% annual rate of return, even with modest 10% projected revenue and earnings growth.  The big question seems to be assessing the risk of an earnings drop due to all the problems in consumer lending . . . I'd love to hear anyone else's analysis on this.

Attaching my TK analysis.

Hi  Robert, no I haven't heard of this one but I've seen two stocks that a lot of people thought were going to be alright, TMA and AHM totally tank. Both are penny stocks now. Why did you use the outliers in section 2A? With a 99-1 U/D ratio that means no downside. I would be hard pressed to think any company that depends on loaning or getting loans would not have a significant downside remaining through the year.

When I hit alt-d I see no debt, ever. How are they leveraged? Dividend went from .16 cents to $4.16 in one year, and the payout ratio went from 1% to 14.5. theose are big jumps going into a correcting economy. do you know why they had sych a drastic jump? One time event?

PEG is 32, not 3.2 but Thirty two. The Proj RV is 32 which might tell one that they are going to preform possibly one third of their historical norm. They are about 1/3 of the price they used to be so they might be fairly priced currently but looking forward I would say watch this one. If you already own I hope I'm wrong. But if BSC can go to $2.00?????

Robert:

Your Forecast Low Price is the same as ANSI's current price which led to a 99.9 Upside-Downside ratio and that is a SSG no-no. The 99.9 is supposed to be a red-flag warning that you need to lower your Low Price.

Here, if you use a $7.00 Low Price, half its current price AND Forecast High and Low PEs that are way, way below their current level (say as low as 7.0 and 3.0), your SSG will still shows a strong Buy.

To me, that means that the SSG is largly guesswork with no meaningful way to forecast the next 5 years.

Also, your 10.0% EPS growth rate is high, compared to the 8.0% that S&P and VL are estimating.

Armin

I would add a caution that there are only two years of data available.  It's hard to use the past for ground your forecast for the future.

I see ten years of data on the ssg Robert provided

Hi Danny,

 
Thanks for your comments.  I haven’t bought ASFI yet, so no harm done.

First of all, I confess an oversight on the upside downside ratio.  I adjusted the low to $1.10 and inserted estimates of 0% for earnings and revenue growth (explained further below), which still yielded a 2.7:1 upside/downside ratio. 

However, it seems that the key issue is to really understand the company to an extent to assess the “penny stock” risk you alluded to, as the downside could perhaps be much lower.  Take Stock’s quality rating of Acceptable could be deceiving, as it is based on historic data.  As I explain below, I don’t think there is inherent “predictability” of revenue and earnings as the data (in isolation) suggests.

When I hit Alt-D I see debt, so I’m not sure why you’re not also seeing it.  Are you using the StockCentral data feed?  I also see debt on the balance sheet at Yahoo Finance.

According to http://biz.yahoo.com/e/070308/asfi8-k.html there was a key event in March 2007: an acquisition of $6.9 billion in receivables, acquired for $300 million plus some earnout.  They took on debt to acquire these receivables. 

The company is essentially a collections agency for consumer debt, buying portfolios of consumer debt (mostly credit card and telecom) from third parties and launching letter-writing, litigation, and other measures to recover from consumers more than when ASFI paid for the receivables.  As far as I can tell, the company has been fairly consistent in managing costs and “process” to recover receivables once acquired.  Therefore, the company’s future seems to be highly affected by acquisitions of receivables.  Here has been the record of receivables acquisition over the past few years:

FY 2007: $440.9M

FY 2006: $200.2M

FY 2005: $126.0M

The rapid rise from 2005 to 2007 makes me wonder whether the growth is sustainable, and what would happen to the stock price should receivables acquisition jump back down to 2005 levels, let’s suppose.  I don’t understand well enough the factors that drive receivables acquisitions . . . is it predictable or not? 

Another risk appears to be that banks, in the current environment, are less willing to lend toward future receivables acquisitions.

The small market cap of $200M opens the possibility that this is an overlooked opportunity by large investors.  Declining analyst EPS in both FY 2008 and 2009 are not encouraging.  On the other hand, I believe the current panic about consumer debt is more than likely artificially depressing the market value of consumer debt, which will probably bounce back.  With ASFI, I just can’t at this point separate this out from other factors affecting ASFI’s performance.

In short, (for me at least) I am moving on to other studies because I can’t get a good handle on what growth prospects are for this company.  It could be undervalued, but I can’t determine with any degree of confidence.   I have attached a revised stock study, but with the aforementioned caveat. 

When I hit Alt-D I see debt, so I’m not sure why you’re not also seeing it.  Are you using the StockCentral data feed?  I also see debt on the balance sheet at Yahoo Finance.

Robert I downloaded your SSG. I just checked again and I am getting zeros on the alt-d command. No idea why the zeros show up on my SSG with TK5. Yes I use the SC data feed.

I have been tracking ASFI for a couple months.  My CAPS rating has taken a bit of a beating as I started tracking it at 22, but indeed when it hit 12ish the expected returns, using conservative imo 5yr future 9-11% EPS and sales growth rates, appears very high and it is up another 6% (i think it went up about 6% last week too) just today, possibly imo signaling that when the market does go back up, this stock may outperform it.  I don't know how exposed they are to the 'credit crisis' nor how long that will last.  Also on google finance a couple of months ago if i remember right there was a person that seemed to think this company was in/could face litigation for a number of reasons, but it could easily have been a disgruntled customer/employee, you may want to review the discussions there.

As far as the .ITK exported file from Robert not containing the debt data, that appears to be a bug in the TK export process, i have also tried exporting as .SSG and .SDF types and the data still disappears.

Other notes in a quick review of ASFI are a lack of a real corporate website.  the ASFI ssg does look better than a couple of their competitors (according to yahoo) FCFC and EPCG.