Provident Financial Share Discussion Threads

[minerve] 14/12/2015 15:42

By-the-way, it doesn't actually enter the index until the 21st...

[minerve] 14/12/2015 15:40

Yes it is an expensive share and I agree. However, it is one of a few that can make money in this dire world economy.

[wad collector] 14/12/2015 13:24

FTSE 100 status does not seem to be helping the share price ; even though the tracker funds are forced to buy it.
It still looks high on fundamentals to me. Holding onto my cash for longer.

[minerve] 11/12/2015 12:25

Big buys going through, don't be fooled into selling....

[wad collector] 10/12/2015 15:40

I see it appears to be all about one broker sell note. I love the way they change their tune on essentially NO news. Almost as if they would profit from any share price change.

Improving economic conditions don’t bode well for sub-prime lender Provident Financial (LON:PFG), according to City broker Numis.

There are numerous signs that after eight years things are beginning to get back on an even keel following the global financial crisis.

The UK government is selling back its shares in the bailed out banks, quantitative easing has come to an end in most places and the US Federal Reserve looks like it is about to raise interest rates from an unprecedented near-zero base.

Whilst commodity markets continue to face trauma, the persistently low oil price also points to an improving environment for consumers as well.

It adds up to a brighter future for most, but not necessarily for Provident.

Numis today downgraded Provident to ‘sell’ as it predicted that the lender’s earnings per share (EPS) growth would “slow to zero” by 2018.

The lender, which among other high margin lending services provides credit score ‘rebuilding217; credit cards, has boomed in the years since the financial crisis, and Numis now describes the assumptions currently being priced in by the market as “heroic”.

A valuation of around 22 times forecast earnings is exceptionally high, says analyst James Hamilton.

He highlights that the Provident business is “more cyclical and not as low risk” as it appears, and as the economic recovery continues, Hamilton expects the ‘specialist217; lending market to lose the recent gains in market share.

“The credit crisis saw the specialist market segment expand as banks withdrew credit from all but the very lowest risk customers,” the analyst said in a note.

“Consequently Provident was able to attract prime customers at sub-prime lending margins, delivering exceptional risk-adjusted margins.

“As competition returns, these customers will return to the prime providers and be replaced (or not as the sub-prime space shrinks) with more usual customers with the associated increase in impairment even assuming no underlying credit quality deterioration.”;

Provident has a long history, and has in recent years grown from being primarily a Home Collected Credit (HCC) business to have a more diversified portfolio, which now includes the Vanquis Bank credit card provider, motor finance arm Moneybarn, short-term or ‘pay-day’; loan business Satsuma and guarantor tied lender Glo.

Despite today’s downgrade, Hamilton still calls Provident “a great business”.

“We believe the combination of high returns with low leverage make Provident a low risk lender as evidenced by it increasing its profit every year through the credit crisis,” he said.

“While this was undoubtedly an exceptional period for Provident the HCC business has been operating for 135 years without ever recording a loss.”

Provident shares rose from around 700-800p in 2008, up to an all-time high of 3,634p last month.

In the year to date, Provident is up around 930p or 37% and this morning traded at 3,391p per share.

The Numis ‘sell’ recommendation has a 2,641p price target which implies some 22% downside.

Share

[wad collector] 10/12/2015 09:19

Gone into freefall for no obvious reason. Gathering my pennies....

[wad collector] 08/12/2015 22:46

Curious share price graph over the last month - a saw tooth wave just about. But where next? I am still waiting in the eaves for more weakness having bought a lump of IPF , which shows a very different share price pattern recently . (Down )
Btw , do I see 7 million PFG shares traded a few days ago?

[minerve] 02/12/2015 20:09

Into the FTSE 100 we go!

Bought some more yesterday. Not expecting much effect on the share price but with greater liquidity and exposure who knows? This share is a bit pricey but solid with good dividend growth expected over the next couple of years.

[wad collector] 10/11/2015 18:43

I am not buying anything yet , I see that Prov is at an all time high that I think stretches the fundamentals a bit . I am going to sit on the cash to await some weakness and hope to buy back.
I hate watching paper gains fall away more than I hate watching further gains disappear.
That said I am looking at adding to my SSE holding as it yields 6% on what I think is a secure footing , and also looking to add to my IPF holding (Which was ,of course ,the other part of this company before it demerged)

[minerve] 10/11/2015 10:25

wad collector

If you sell, what are you going to buy that has better opportunity for growth? What circumstances have changed in order for you to feel it is a sell?

[loftus16] 09/11/2015 18:27

Well done. That's a nice performance in a short space of time for a large cap. I'm holding as per.

[wad collector] 09/11/2015 15:31

I just sold mine for thruppence over £36. Happy with 30% over 3 months.

[minerve] 30/10/2015 19:29

I bought more today. :)

[wad collector] 30/10/2015 19:16

Last weeks Sunday Times say sell; bizarre that Liberum come up with a £23.99 value (bizarre in itself to choose such a precise but non-multiple number - almost as if somebody had got hold of Daddy's computer)
I am too old to take much notice of one broker's sell note but it would explain the dip this week.


Inside the City: Provident must pray economy won’t catch cold

Danny Fortson Published: 25 October 2015
Print
If you happen to be a sub-prime lender like Provident Financial, these are the best of times Alamy If you happen to be a sub-prime lender like Provident Financial, these are the best of times Alamy
HOW depressing. The clocks went back this morning, signalling even shorter days, longer nights, and bad weather.

If you happen to be a sub-prime lender like Provident Financial, these are the best of times. For it is around now that we venture online for bouts of retail therapy and Christmas gift scouting.

Provident has been on an absolute tear, as you can see from our chart. Its share price has surged an astonishing 71% in the past year to close on Friday at £35.57, valuing the company at £5.2bn. The dividend yield is better than 4% to boot. What’s not to like?

Well, a lot. Last year, non-mortgage household debt in the UK surged by 9%, the fastest rate in a decade, according to PwC. By the end of this year, the average household will owe more than £10,000 on credit cards, personal loans and overdrafts.

After seven years of record-low interest rates, Britain has fallen back in love with debt. But what happens when interest rates start ticking up? Or if wage growth softens? Provident’s debt collectors visit 1m households a week. Those visits will be less welcome — and less profitable — when the economic weather changes.

Chief executive Peter Crook has done a fine job of spreading Provident’s tentacles into just about every corner of the market for debtors who can’t get credit from the banks.

Its star performer is Vanquis Bank, which offers credit cards. But it also has car finance arm Moneybarn and Satsuma, purveyor of 1,575% rate personal loans. Next year the company will launch Glo, a guarantor loan arm that offers bigger lines of credit guaranteed by a friend or family member.



Provident’s shares now trade at more than 18 times 2016 earnings estimates. When the financial reckoning comes, a lot of debts will go unpaid. Provident has proved adept at managing in that tricky world, but investors are giving it a bit too much credit, so to speak.

Liberum Capital thinks the stock is worth £23.99. I’m not sure that is the right number, but I agree that now is the time to take profits. Sell.

[minerve] 23/10/2015 11:41

I have that problem ALL the time wad. I currently have that problem also with RB., IMT, RAI and NXT. Just let them run. Interest rate decisions are getting pushed back and credit defaults are not looking too worrying. Couple of months and then think about CGT before the herd do in March.

[wad collector] 23/10/2015 08:15

Wow , what a month - up £5! The trader in me wants to sell ,but the investor says no.

[minerve] 16/10/2015 10:47

I bought a tranche yesterday. Honest! Sold RMG. Bought further into PFG. Great shareholding.

[wad collector] 16/10/2015 09:20

Tripping the share price to an ATH ! Good statement drawing a line under Polish losses too.

[loftus16] 16/10/2015 09:13

Solid IMS.

[wad collector] 07/9/2015 12:46

A reasonable policy ; my f-i-l has held his so long that the dividend exceeds his original buying price.
However the share price did become quite cyclical for a few yrs so I made good money trading them ; the shorters seem to have lost interest here now though.I got out too early last yr ; missed bigger gains. Sell and regret.

[loftus16] 03/9/2015 18:05

Welcome back. I've never tried trading this over the last 25+ years.

[wad collector] 28/8/2015 17:06

I think I caught the nadir this week. Shame I had already invested the rest of my cash elsewhere...

[wad collector] 24/8/2015 12:28

Finally bought some back at 2714
I am sceptical about this share price "crash". I think it will shortly be forgotten as to why it happened.

[loftus16] 25/4/2015 20:42

Hope you did - a bit odd selling though.

[wad collector] 26/2/2015 22:15

That's an impressive dividend rise - look forward to getting back in!