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Santander Consumer Is A Difficult Business To Invest Or Analyze

|Includes: Santander Consumer USA Holdings Inc (SC)

Forward P/E of 5X. Trading below book value. 2017E Revenues of $7b @ 12% net margins. So with the market cap at $3.9b, SC looks cheap.

The reason its cheap isn't obvious. Yet they have missed filing financial statements. Also it seems like the loan performance is deteriorating. So those are good reasons for why its cheap.

Here's the problem. Most of the revenue is net interest income from loans on autos. The P/E ratio is pretty meaningless since one year of impairments can wipe out years of net income. Also, interest rates are low.

Overall, I find it hard to value or invest in financials since interest rates, the economy and loan performance is generally not in management's control. So while the stock is cheap, P/E is really not a great metric here. If the cycle turns down, SC has a lot of downside.

Hard business to value and/or invest in.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.