The Credit Corp Group Limited (ASX: CCP) share price will be one to watch this morning.
This follows the release of a trading update by the debt receivables company this morning.
How is Credit Corp performing?
According to the release, Credit Corp continues to be very competitive in all its debt buying markets. This left it with a purchasing pipeline of $290 million contracted at the end of March.
As a result, it remains on target to achieve its FY 2021 purchasing guidance of $310 million to $330 million.
Another positive was that the acquisition of the Collection House book is performing to expectations. And while there has been some softening in collections since COVID-19 stimulus has been withdrawn, this has been within expectations.
Pleasingly, the company notes that it still has the capacity to increase investment as opportunities arise. As things stand, it has cash and undrawn lines of ~$400 million.
FY 2021 guidance
Looking ahead the company is on track to achieve or surpass all of the upgraded guidance given in February.
Purchase debt ledger investments guidance remains in the range of $310 million to $330 million and its net profit after tax guidance remains $85 million to $90 million. The latter compares to FY 2020’s underlying net profit after tax of $79.6 million.
Net lending, however, is now expected to be $10 million to $20 million. This compares to previous guidance of $5 million to $10 million.
Is the Credit Corp share price in the buy zone?
While brokers haven’t responded to this update as of yet, one broker that was already positive on the company is Macquarie.
According to a note from last month, the broker has an outperform rating and $34.80 price target.
Based on the latest Credit Corp share price, this price target implies potential upside of almost 17% over the next 12 months.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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