Oh, I meant the lower ratio PNC had indicates less conservatism...

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JoeGambler

7,128 Posts.

1987

11/10/22

13:36

Post #: 64137801
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Originally posted by tomhagen: ↑

I think more conservative is the right way to look at it. Could also be: purchases better, collects better, better long term management of the book. Probably a combination of all the above but the heavy lifting would be done by accounting conservatism.

Looking at the stats I posted - it actually disadvantages CCP. It should really be done on the average PDP/PDL carry value, not the figure at the end of the period. CCP names this ratio "PDL financial asset turnover" and sometimes you'll see it on their presentations.

In my mind this is the most important indicator of the long term health of the book. Amortisation rates can vary year to year, but it's very difficult to visualise how small movements add up over the long term. All of a sudden, one company is collecting 2-3x more than the other relative to their book.

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Oh, I meant the lower ratio PNC had indicates less conservatism in the book value? If the the collections are low relative to book value that could be an indication of a stretched valuation? And the opposite for CCP? I think we had our wires crossed.

Yes asset turnover is a key metric they use, notably to compare themselves to US competitors.

Good pick up on the very low asset turnover of PNC, that is a red flag on top of the high leverage.

Last edited by JoeGambler: 11/10/22

CCP Price at posting: $16.93 Sentiment: None Disclosure: Held
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0 Great analysis

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