Shares of Santander Consumer USA Holdings Inc. rallied 2.3% in response to fourth quarter and 2020 results. Quarterly earnings of $1.70 per share easily outpaced the Zacks Consensus Estimate of $1.13. Also, the bottom line was significantly above 43 cents earned in the year-ago quarter.
Results benefited from higher revenues on the back of increased originations. Also, credit costs witnessed a fall during the quarter. However, rise in operating expenses was an undermining factor.
Net income was $521.5 million, up from $146.1 million in the prior-year quarter.
In 2020, earnings per share of $2.87 beat the consensus estimate of $2.31 and was marginally up year over year. Net income declined 8.4% to $910.9 million.
Revenues & Expenses Rise
Total quarterly revenues were $1.32 billion, up 21% year over year.
In 2020, total revenues grew 2.4% to $4.83 billion.
Net finance and other interest income totaled $1.34 billion, up 15.6% year over year.
Total other loss was $15.4 million compared with $64 million a year ago.
Operating expenses increased 2.9% to $318.3 million, mainly due to higher compensation and benefits costs.
As of Dec 31, 2020, net finance receivables, loans and leases were $27 billion, down 2.7% year over year. Total originations during the reported quarter of $6.4 billion grew 5.4%.
Credit Quality Improves
Provision for credit losses plunged 53.4% year over year to $254.1 million.
Further, the total net charge-offs ratio was 3.5%, down from 8.2% in the prior-year quarter. Also, end-of-period delinquency ratio on loans held for investment was 3.2%, down from 5.1%.
Solid Capital & Profitability Ratios
As of Dec 31, 2020, Common Equity Tier 1 capital ratio was 14.6% compared with 14.8% on Dec 31, 2019.
Return on average assets was 4.3% as of Dec 31, 2020, up from 1.2% in the prior-year period. Further, return on average equity was 38.8%, up from 8.0%.
Our View
Santander Consumer is well positioned for revenue growth, as the economy gradually recovers and demand for consumer loans improves. However, elevated expenses pose a major headwind.
Currently, Santander Consumer carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Consumer Lenders
Ally Financial’s (ALLY - Free Report) fourth-quarter 2020 adjusted earnings of $1.60 per share handily surpassed the Zacks Consensus Estimate of $1.05. Also, the bottom line surged 68.4% from the year-ago figure.
Sallie Mae’s (SLM - Free Report) fourth-quarter 2020 earnings per share of $1.15 (on core basis) handily surpassed the Zacks Consensus Estimate of 33 cents. Also, the bottom line compared favorably with 33 cents reported in the prior-year quarter.
Navient Corporation (NAVI - Free Report) reported fourth-quarter 2020 core earnings per share of 88 cents that surpassed the Zacks Consensus Estimate of 81 cents. Also, the bottom line was above the year-ago quarter figure of 69 cents.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Shares of Santander Consumer USA Holdings Inc. rallied 2.3% in response to fourth quarter and 2020 results. Quarterly earnings of $1.70 per share easily outpaced the Zacks Consensus Estimate of $1.13. Also, the bottom line was significantly above 43 cents earned in the year-ago quarter.
Results benefited from higher revenues on the back of increased originations. Also, credit costs witnessed a fall during the quarter. However, rise in operating expenses was an undermining factor.
Net income was $521.5 million, up from $146.1 million in the prior-year quarter.
In 2020, earnings per share of $2.87 beat the consensus estimate of $2.31 and was marginally up year over year. Net income declined 8.4% to $910.9 million.
Revenues & Expenses Rise
Total quarterly revenues were $1.32 billion, up 21% year over year.
In 2020, total revenues grew 2.4% to $4.83 billion.
Net finance and other interest income totaled $1.34 billion, up 15.6% year over year.
Total other loss was $15.4 million compared with $64 million a year ago.
Operating expenses increased 2.9% to $318.3 million, mainly due to higher compensation and benefits costs.
As of Dec 31, 2020, net finance receivables, loans and leases were $27 billion, down 2.7% year over year. Total originations during the reported quarter of $6.4 billion grew 5.4%.
Credit Quality Improves
Provision for credit losses plunged 53.4% year over year to $254.1 million.
Further, the total net charge-offs ratio was 3.5%, down from 8.2% in the prior-year quarter. Also, end-of-period delinquency ratio on loans held for investment was 3.2%, down from 5.1%.
Solid Capital & Profitability Ratios
As of Dec 31, 2020, Common Equity Tier 1 capital ratio was 14.6% compared with 14.8% on Dec 31, 2019.
Return on average assets was 4.3% as of Dec 31, 2020, up from 1.2% in the prior-year period. Further, return on average equity was 38.8%, up from 8.0%.
Our View
Santander Consumer is well positioned for revenue growth, as the economy gradually recovers and demand for consumer loans improves. However, elevated expenses pose a major headwind.
Currently, Santander Consumer carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Consumer Lenders
Ally Financial’s (ALLY - Free Report) fourth-quarter 2020 adjusted earnings of $1.60 per share handily surpassed the Zacks Consensus Estimate of $1.05. Also, the bottom line surged 68.4% from the year-ago figure.
Sallie Mae’s (SLM - Free Report) fourth-quarter 2020 earnings per share of $1.15 (on core basis) handily surpassed the Zacks Consensus Estimate of 33 cents. Also, the bottom line compared favorably with 33 cents reported in the prior-year quarter.
Navient Corporation (NAVI - Free Report) reported fourth-quarter 2020 core earnings per share of 88 cents that surpassed the Zacks Consensus Estimate of 81 cents. Also, the bottom line was above the year-ago quarter figure of 69 cents.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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