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Is World Acceptance a Great Stock for Value Investors?
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Let’s see if company World Acceptance Corporation (WRLD - Free Report) stock is a good choice for value-oriented investors right now from multiple angles.
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put World Acceptance Corporation (WRLD - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, World Acceptance has a trailing twelve months PE ratio of 7.6, as you can see in the chart below:
This level actually compares favorably with the market at large, as the PE for the S&P 500 stands at about 19.9. If we focus on the long-term PE trend, World Acceptance’s current PE level puts it slightly below its midpoint over the past five years, with the number having risen rapidly over the past few months. See the chart below.
Further, the stock’s PE also compares favorably with the Zacks classified Finance-Consumer Loan industry’s trailing twelve months PE ratio, which stands at 11.23. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that World Acceptance has a forward PE ratio (price relative to this year’s earnings) of just 8.4, so it is fair to expect an increase in the company’s share price in the near future.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, World Acceptance has a P/S ratio of about 1.07. This is lower than the S&P 500 average, which comes in at 2.98 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.
Broad Value Outlook
In aggregate, World Acceptance currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes World Acceptance a solid choice for value investors.
What About the Stock Overall?
Though World Acceptance might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘C’ and a Momentum score of ‘C’. Still, World Acceptance has a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at best. The current quarter has seen one estimate go higher in the past sixty days compared to one lower, while the full year estimate has seen one up and one down in the same time period.
This has had just a small impact on the consensus estimate though, as the current quarter consensus estimate has remained constant in the past two months, while the full year estimate has inched up by 1.1%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
This somewhat mixed trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.
Bottom Line
World Acceptance is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, with a sluggish industry rank (among the Bottom 28%) and a Zacks Rank #3, it is hard to get too excited about this company overall. In fact, over the past two years, the Finance-Consumer Loans industry has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.
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Is World Acceptance a Great Stock for Value Investors?
Let’s see if company World Acceptance Corporation (WRLD - Free Report) stock is a good choice for value-oriented investors right now from multiple angles.
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put World Acceptance Corporation (WRLD - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, World Acceptance has a trailing twelve months PE ratio of 7.6, as you can see in the chart below:
This level actually compares favorably with the market at large, as the PE for the S&P 500 stands at about 19.9. If we focus on the long-term PE trend, World Acceptance’s current PE level puts it slightly below its midpoint over the past five years, with the number having risen rapidly over the past few months. See the chart below.
Further, the stock’s PE also compares favorably with the Zacks classified Finance-Consumer Loan industry’s trailing twelve months PE ratio, which stands at 11.23. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that World Acceptance has a forward PE ratio (price relative to this year’s earnings) of just 8.4, so it is fair to expect an increase in the company’s share price in the near future.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, World Acceptance has a P/S ratio of about 1.07. This is lower than the S&P 500 average, which comes in at 2.98 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.
Broad Value Outlook
In aggregate, World Acceptance currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes World Acceptance a solid choice for value investors.
What About the Stock Overall?
Though World Acceptance might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘C’ and a Momentum score of ‘C’. Still, World Acceptance has a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at best. The current quarter has seen one estimate go higher in the past sixty days compared to one lower, while the full year estimate has seen one up and one down in the same time period.
This has had just a small impact on the consensus estimate though, as the current quarter consensus estimate has remained constant in the past two months, while the full year estimate has inched up by 1.1%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
WORLD ACCEPTANC Price and Consensus
WORLD ACCEPTANC Price and Consensus | WORLD ACCEPTANC Quote
This somewhat mixed trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.
Bottom Line
World Acceptance is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, with a sluggish industry rank (among the Bottom 28%) and a Zacks Rank #3, it is hard to get too excited about this company overall. In fact, over the past two years, the Finance-Consumer Loans industry has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>