Small loans are back in demand. World Acceptance Corporation ( WRLD - Snapshot Report ) recently reported record fiscal third-quarter results which came on the heels of its record second-quarter results in October. Even with all the records, the company still has value, with a forward P/E of just 10.

World Acceptance specializes in short-term small loans, medium-term larger loans, and related credit insurance products to individuals with limited access to sources of consumer credit in 12 states and Mexico.

Revenue Jumped 12.2% in the Fiscal Third Quarter

On Jan 27, World Acceptance reported fiscal third quarter results which surprised for the third quarter in a row on the Zacks Consensus Estimate. Earnings per share were $1.12 compared to the consensus of $1.06.

This was a 25.8% increase from the third quarter of the prior year where the company made just 89 cents.

Revenue rose to $126 million from $112.3 million in the fiscal third quarter of 2010. The quarter was boosted by average net loans rising 14.9% which meant more interest and fees. The company also opened 59 new offices, including entering the state of Wisconsin for the first time.

Gross loans outstanding climbed 15.1% to $965.4 million from $838.9 million. Interest and fees increased by 12.1% to $109.56 million from $97.6 million in the fiscal third quarter of 2010.

Credit loss ratios also improved in the quarter as net charge-offs as a percentage of average net loans remained near historical levels of 16.3% on an annualized basis. Net charge-offs were at 17.8% a year ago.

Past due loans, those over 61 days delinquent, also fell to 4% from 4.3%.

Zacks Consensus Estimates Rise for Fiscal 2011 and 2012

Given yet another record quarter, it's not surprising that analysts have raised their fiscal 2011 and even their 2012 estimates.

The fiscal 2011 Zacks Consensus Estimate jumped to $5.61 from $5.55 per share in the last week. That is earnings growth of 28.5%.

Another 13% earnings growth is expected in fiscal 2012, as the Zacks Consensus moved 12 cents higher over the last week to $6.33 per share.

Shares at 5-Year Highs

Shares have been hot off the March 2009 lows and the recent strong earnings reports have been pushing the stock to new multi-year highs.

Despite the stock surge, World Acceptance is still a value stock. In addition to its low P/E ratio, it has a price-to-book ratio of just 2.1, which is well under the cut-off for a value stock which is 3.0.

World Acceptance also has a tremendous 1-year return on equity (ROE) of 22%.

World Acceptance is a Zacks #2 Rank (buy) stock.

Read the Dec 28, 2010 article.

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Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service. You can follow her at twitter.com/traceyryniec.