Wall Street's Least-Loved Stock Is Now a Personal Loan Company

(Bloomberg) -- World Acceptance Corp., a company that specializes in small loans to people with limited credit, was already having a rough day after its first-quarter earnings miss. Now, an analyst downgrade has made it the least-loved stock on Wall Street.

Analysts at Janney Montgomery Scott LLC cut their rating on the stock to sell from neutral on Thursday, citing issues with the company’s credit quality. World Acceptance now has sell ratings from each of the four analysts tracked by Bloomberg, joining a dubious club of about eight stocks in the Russell 3000 Index that don’t have a single buy or hold rating. None of the others have more than one or two analysts, suggesting sentiment around World Acceptance is particularly bleak.

Shares of the Greenville, South Carolina-based company plunged as much as 26%, the most since January 2017. Ahead of earnings, the stock was up 60% on the year. The average analyst price target now suggests the shares could fall another 38% in the next 12 months.

“Fundamentals are eroding and the stock is significantly overvalued in our opinion,” Janney analyst John Rowan said in a research note. “Today’s miss was driven by credit first and foremost; however, surging operating expenses also played a significant role too.”

Stephens Inc. analyst Vincent Caintic called World Acceptance’s results “deteriorating” and thinks weak performance stems from the company’s “push to grow more business via new customers.”

World Acceptance is one of the largest small-loan consumer finance companies, operating 1,218 branches in 16 states as of June 30.

To contact the reporter on this story: Michael Bellusci in Toronto at mbellusci2@bloomberg.net

To contact the editors responsible for this story: Brad Olesen at bolesen3@bloomberg.net, Catherine Larkin

©2019 Bloomberg L.P.