DFC Global Corp
), in a prelim result, revealed that it expects operating
earnings between 20-24 cents for the third quarter of fiscal
2013, ended Mar 31, 2013. Concurrently, the company lowered
the fiscal 2013 earnings expectation to $1.70 to $1.80 per share
from $2.35 to $2.45 per share guided earlier.
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However, the guidance excludes the impact of one-time
restructuring charges stemming from segmentation of the company's
global business into retail and internet platforms.
DFC Global also guided consolidated adjusted EBITDA to the range
of $52 to $54 million for the third quarter of fiscal 2013.
Share price of DFC Global fell nearly 22% to close at $13.04 on
Management also stated that due to new loan rollover limitations
(three loan rollovers per customer), several outstanding
short-term consumer loans in the United Kingdom became
immediately due, resulting in a temporary 'credit crunch' for the
customers. As a result, the company is facing more loan defaults
in its UK business, which in turn weighs on the earnings of the
company. In anticipation of the increasing number of loan
defaults, DFC Global constricted the lending-underwriting norms,
which again is weighing on loan growth in UK.
There was no earnings momentum over the last 60 days. Following
the news release, we expect movement in estimates. The Zacks
Consensus Estimate for fiscal 2013 is currently pegged at $2.41,
up 11.6% year over year. The estimate is near the high end of the
company's previous guidance. With the company drastically
slashing its guidance, the Zacks Consensus Estimate is also
likely to move south.
DFC Global serves the basic needs of the lower- and middle-income
working-class individuals, who represent the largest part of the
population in the company's operative countries. Despite
all odds, the company continues to envision on becoming one of
the leading providers of financial services to the under-banked
and unbanked consumer (the ALICE demographic or asset limited,
income constrained, employed). The overall long-term earnings
growth is likely to be 17.2%.
DFC Global carries a Zacks Rank #3 (Hold). Among other financial
Euronet Worldwide Inc
SS&C Technologies Holdings, Inc
) carry a favorable Zacks Rank #1 (Strong Buy) and appear