CPSS: Growth at a bargain?

Company Profile:

Consumer Portfolio Services (CPS) is an independent specialty finance company that provides indirect automobile financing to individuals with past credit problems, low incomes or limited credit histories. We purchase retail installment sales contracts primarily from franchised automobile dealerships secured by late model used vehicles and, to a lesser extent, new vehicles. We fund these contract purchases on a long-term basis primarily through the securitization markets and service the contracts over their lives. Our operational headquarters are located in Irvine, California and we have four additional strategically located servicing branches in Nevada, Virginia, Florida and Illinois.

Since we began operations in 1991 and through March 2014, we have purchased over $10.6 billion in contracts. We currently service a total managed portfolio of approximately $1.295 billion with approximately 110,000 customers and 700 employees. We maintain dealer relationships in 48 states across the United States. Our common stock is traded on the NASDAQ National Market System under the ticker “CPSS.”

This is an old MF Pay Dirt service pick. They have been growing earnings at 25% a quarter and are trading at a PE of 7 with a forward PE of 6. Not sure why they don’t trade higher. There has been some bad press in their industry with comparisons made to subprime mortgages that the CEO thinks is unwarranted. The CEO seems to be a straight shooter with a focus on conservatively running his business. Anyone follow them or have any other insights?

Jeff

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