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LendingClub (LC) Stock Up 12.4% Despite Incurring Loss in Q1

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LendingClub Corporation’s (LC first-quarter 2019 adjusted loss of 3 cents per share came in line with the Zacks Consensus Estimate. The figure remained flat year over year.

Shares of the company rallied 12.4% since the release of the results, driven by higher revenues and an upbeat outlook for second-quarter 2019. Further, the results reflected higher volume of loan originations. However, higher expenses, along with lower loan balances and fall in cash and cash equivalents, were headwinds.

After taking into consideration non-recurring items, consolidated net loss was $19.9 million compared with net loss of $31.2 million reported in the year-ago quarter.

Revenues Improve, Costs Rise

Total net revenues grew 15% year over year to $174.4 million. This upside was driven by higher volume of loan originations. Further, the reported figure surpassed the Zacks Consensus Estimate of $169 million.

Total operating expenses were $194.3 million, flaring up 6.3% year over year. This upswing resulted from rise in all components of operating expenses, offset by the absence of class action and regulatory litigation expenses.

Adjusted EBITDA totaled $22.6 million, up 47.3% from the prior-year quarter’s reported tally.

In the March-end quarter, loan originations were $2.7 billion, up 18% year over year.

As of Mar 31, 2019, cash and cash equivalents were $402.3 million, up 7.9% from the Dec 31, 2018 level. Loans held for investment at fair value were down 9.8% from the prior-quarter end to $1.7 billion. Total stockholders’ equity was $864.8 million, down from $869.2 million recorded as of Dec 31, 2018.

Guidance

Concurrent with the results, management provided its guidance for second-quarter and 2019.

Second-Quarter 2019

  • Total net revenues of $185-$195 million
  • Adjusted EBITDA of $25-$30 million
  • GAAP and adjusted net loss of $11-$6 million

Full-Year 2019

  • Total net revenues of $765-$795 million
  • Adjusted EBITDA of $115-$135 million
  • GAAP consolidated net loss of $37-$17 million and adjusted net loss of $29-$9 million

Bottom Line

LendingClub’s revenue growth is commendable on the back of strong loan originations. Also, rise in adjusted EBITDA is impressive.

Nonetheless, declining loan balance remains a headwind. Furthermore, the company’s exposure to numerous legal hassles might keep expenses elevated in the near term.

LendingClub Corporation Price, Consensus and EPS Surprise

 

LendingClub Corporation Price, Consensus and EPS Surprise | LendingClub Corporation Quote


LendingClub currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Performance of Other Finance Stocks

CIT Group Inc’s first-quarter 2019 earnings from continuing operations of $1.18 per share surpassed the Zacks Consensus Estimate of $1.09. In the prior-year quarter, the company recorded adjusted earnings from continuing operations of 74 cents. Notably, the reported quarter
did not have any noteworthy items.

Moody's (MCO - Free Report) reported first-quarter 2019 adjusted earnings of $2.07 per share, which handily outpaced the Zacks Consensus Estimate of $1.88. In addition, the figure improved 2% from the year-ago quarter.

Hercules Capital, Inc.’s (HTGC - Free Report) first-quarter 2019 net investment income of 30 cents per share missed the Zacks Consensus Estimate by a penny. The bottom line also came in 3.2% lower than the year-ago figure. Results included one-time charge of $1.6 million or 2 cents per share related to the full redemption of 6.25% notes due 2024.

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