Nicholas Financial: An Outstanding Buy

Jul.31.09 | About: Nicholas Financial, (NICK)

Nicholas Financial (NASDAQ:NICK) just reported earnings for the June quarter which is the company's fiscal first quarter. Net earnings, excluding non-cash unrealized mark-to-market gain on interest rate swaps increased 34% to $2,081,000 as compared to $1,558,000 for the three months ended.

On an earnings-per-share basis, NICK earned 20 cents a share compared with 15 cents a year ago. Revenue increased 4% to $13,694,000 for the three months ended June 30, 2009 as compared to $13,119,000 for the three months ended June 30, 2008.

According to Peter L. Vosotas, Chairman and CEO, "We are pleased with our solid first quarter results. We concentrated on basic careful lending and collecting fundamentals and will continue to do so. Our results were favorably impacted by a reduction in the net charge-off rate, lower operating expenses as a percentage of average net receivables and a reduction in the cost of borrowed funds. While we remain cautious, we are encouraged that the economy is showing some signs of stability and we feel comfortable proceeding with our planned expansion. This expansion will include new branch locations in Akron, Ohio and in Gastonia, North Carolina, which will bring our number of branch locations to 50 in 12 states. The Company remains open to acquisitions should an opportunity present itself," added Vosotas.

This is a great report. The most important fact is that the provision for credit losses is lower than it was one year ago. This most likely means that worst of the storm has passed for NICK. Bear in mind that this is a stock that's still trading around 25% below book value. NICK is an outstanding buy.

Disclosure: Long NICK