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CPSS, What Am I Missing?

|Includes: Consumer Portfolio Services, Inc. (CPSS)

I've been watching CPSS for some time. I'm an amateur for sure, but I have a fairly reasonable track record of identifying good short term investments. I won't go into great detail, but my very first purchase was AMD after a comparison with INTC, and it appeared to be undervalued at $1.87 back in November, 2012. My problem is that I always sell too soon, but I digress.

Regarding CPSS, the stock rose from $1.89 at its 52 week low, to a high of $12.79 at the beginning of April, and has now fallen to $6.19 on July 23. The profile of CPSS describes the business as a financing company for used automobiles for higher risk borrowers, presumably through the dealerships that they have developed relationships with. An article following the company's April earnings report sites the revenue growth for CPSS to be 23%( The quoted EPS for CPSS is shown as $2.62, though the aforementioned article states the EPS for the first quarter of 2013 to be .12 per share. Multiplied out over four identical quarters the EPS would be .48 per share annually.

Typically, when I see stock values at <15x EPS with acceptable debt levels I consider them to be of significant value, and a bargain waiting to boom. Discarding the stated $2.62 EPS shown on quotes, and using the fractional EPS of .48, the stock is trading below the 15X mark, and is experiencing substantial growth. I've taken a small stake in CPSS only to watch it continue its trail of retreat. Common sense would lead one to believe that businesses such as CPSS would thrive in an economy where many borrowers may not have access to more traditional types of credit, so I'm asking, "What am I missing?" I'm going to hang in there for the next earnings report and hope it pops, but I have to wonder if I've missed something, or if CPSS is about to ring the register.

Disclosure: I am long CPSS.