Could someone compare the credit business of Collection House (CLH) against the business of Credit Corp?
CCP appears to have a much higher margin business, and on top of that CCP appears to have a higher growth rate. Unfortunately, CCP also has a much richer valuation. If I try to value the businesses by their return on equity, and I adjust that for the surplus in market price over book value, CCP is trading for around a 5.8% return:
Book Value = 4.56 / Trading Price = 18.18 * Return on Equity = 23.3% = 5.84%
CLH is trading around:
Book Value = 1.34 / Trading Price = 1.52 * Return on Equity = 10.58% = 9.32%
Even though you are paying a premium for CCP's growth, over time the higher growth rate should make it a better investment. But I have just started to look at CLH, and maybe it is at an inflection point where they can change their growth rate?
CCP Price at posting:
$18.12 Sentiment: Hold Disclosure: Not Held
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.
(20min delay)