Latitude Group Holdings (ASX:LFS) - Share price, News & Analysis

Q: What is the Fair Price of LFS when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

LFS (A$1.33) is trading above our estimate of [[fair value]] (A$0.43)

LFS fundamental analysis
Snowflake Score
Valuation	4/6
Future Growth	3/6
Past Performance	5/6
Financial Health	2/6
Dividends	4/6

LFS Stock Overview

Latitude Group Holdings Limited operates in instalments and lending business in Australia and New Zealand.

Rewards

Price-To-Earnings ratio (8.6x) is below the Australian market (14.6x)

Earnings are forecast to grow 8.28% per year

Earnings grew by 244.5% over the past year

Risk Analysis

Debt is not well covered by operating cash flow

Unstable dividend track record

Shareholders have been diluted in the past year

Latitude Group Holdings Competitors

Credit Corp Group

ASX:CCP

AU$1.4b

Eclipx Group

ASX:ECX

AU$694.5m

Money3

ASX:MNY

AU$425.9m

FSA Group

ASX:FSA

AU$138.9m

Price History & Performance

Summary of all time highs, changes and price drops for Latitude Group Holdings
Historical stock prices
Current Share Price	AU$1.25
52 Week High	AU$2.50
52 Week Low	AU$1.06
Beta	0
1 Month Change	-30.94%
3 Month Change	-32.07%
1 Year Change	-47.92%
3 Year Change	n/a
5 Year Change	n/a
Change since IPO	-53.70%

Shareholder Returns

	LFS	AU Consumer Finance	AU Market
7D	1.6%	-1.0%	-2.4%
1Y	-47.9%	-59.1%	-12.0%

Return vs Industry: LFS exceeded the Australian Consumer Finance industry which returned -59.1% over the past year.

Return vs Market: LFS underperformed the Australian Market which returned -12% over the past year.

Price Volatility

Is LFS's price volatile compared to industry and market?
LFS volatility
LFS Average Weekly Movement	8.1%
Consumer Finance Industry Average Movement	8.2%
Market Average Movement	9.9%
10% most volatile stocks in AU Market	16.5%
10% least volatile stocks in AU Market	4.4%

Stable Share Price: LFS is not significantly more volatile than the rest of Australian stocks over the past 3 months, typically moving +/- 8% a week.

Volatility Over Time: LFS's weekly volatility (8%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
2015	n/a	A. Fahour	https://www.latitudefinancial.com.au

Latitude Group Holdings Limited operates in instalments and lending business in Australia and New Zealand. It provides various installment products to support customers, the merchants, and other commercial partners. The company also offers lending products comprising credit cards, personal loans, and motor loans through commercial partners, as well as various channels, such as direct, online, and by phone.

Latitude Group Holdings Fundamentals Summary

How do Latitude Group Holdings's earnings and revenue compare to its market cap?
LFS fundamental statistics
Market Cap	AU$1.30b
Earnings (TTM)	AU$160.90m
Revenue (TTM)	AU$699.70m

8.1x

P/E Ratio

1.9x

P/S Ratio

Is LFS overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
LFS income statement (TTM)
Revenue	AU$699.70m
Cost of Revenue	AU$0
Gross Profit	AU$699.70m
Other Expenses	AU$538.80m
Earnings	AU$160.90m

Last Reported Earnings

Dec 31, 2021

Next Earnings Date

n/a

Earnings per share (EPS)	0.15
Gross Margin	100.00%
Net Profit Margin	22.99%
Debt/Equity Ratio	376.3%

How did LFS perform over the long term?

See historical performance and comparison

Dividends

12.6%

Current Dividend Yield

88%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is LFS undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

3/6

Valuation Score 3/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
PEG Ratio

Key Valuation Metric

Which metric is best to use when looking at relative valuation for LFS?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for LFS. This is calculated by dividing LFS's market cap by their current preferred multiple.
What is LFS's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	AU$1.30b

LFS key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	n/a
Enterprise Value/EBITDA	n/a
PEG Ratio	1x

Price to Earnings Ratio vs Peers

How does LFS's PE Ratio compare to its peers?

LFS PE Ratio vs Peers

The above table shows the PE ratio for LFS vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	9.6x
CCP Credit Corp Group	14.4x	10.7%	AU$1.4b
ECX Eclipx Group	7.6x	-18.1%	AU$694.5m
MNY Money3	9.4x	12.4%	AU$425.9m
FSA FSA Group	7.5x	n/a	AU$138.9m
LFS Latitude Group Holdings	8.6x	8.3%	AU$1.3b

Forward PE

Price-To-Earnings vs Peers: LFS is good value based on its Price-To-Earnings Ratio (8.6x) compared to the peer average (9.7x).

Price to Earnings Ratio vs Industry

How does LFS's PE Ratio compare vs other companies in the Global Consumer Finance Industry?

Price-To-Earnings vs Industry: LFS is good value based on its Price-To-Earnings Ratio (8.6x) compared to the Global Consumer Finance industry average (12x)

Price to Earnings Ratio vs Fair Ratio

What is LFS's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

LFS PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	8.1x
Fair PE Ratio	17.1x

Price-To-Earnings vs Fair Ratio: LFS is good value based on its Price-To-Earnings Ratio (8.6x) compared to the estimated Fair Price-To-Earnings Ratio (17.1x).

Share Price vs Fair Value

What is the Fair Price of LFS when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: LFS (A$1.33) is trading above our estimate of fair value (A$0.43)

Significantly Below Fair Value: LFS is trading above our estimate of fair value.

Price to Earnings Growth Ratio

PEG Ratio: LFS is poor value based on its PEG Ratio (1x)

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Future Growth

How is Latitude Group Holdings forecast to perform in the next 1 to 3 years based on estimates from 2 analysts?

Future Growth Score

3/6

Future Growth Score 3/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

8.3%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: LFS's forecast earnings growth (8.3% per year) is above the savings rate (1.8%).

Earnings vs Market: LFS's earnings (8.3% per year) are forecast to grow faster than the Australian market (5.6% per year).

High Growth Earnings: LFS's earnings are forecast to grow, but not significantly.

Revenue vs Market: LFS's revenue (10.9% per year) is forecast to grow faster than the Australian market (5.1% per year).

High Growth Revenue: LFS's revenue (10.9% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: LFS's Return on Equity is forecast to be low in 3 years time (14.5%).

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Past Performance

How has Latitude Group Holdings performed over the past 5 years?

Past Performance Score

5/6

Past Performance Score 5/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

38.5%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: LFS has high quality earnings.

Growing Profit Margin: LFS's current net profit margins (23%) are higher than last year (7.6%).

Past Earnings Growth Analysis

Earnings Trend: LFS's earnings have grown significantly by 38.5% per year over the past 5 years.

Accelerating Growth: LFS's earnings growth over the past year (244.5%) exceeds its 5-year average (38.5% per year).

Earnings vs Industry: LFS earnings growth over the past year (244.5%) exceeded the Consumer Finance industry 81.3%.

Return on Equity

High ROE: LFS's Return on Equity (10.2%) is considered low.

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Financial Health

How is Latitude Group Holdings's financial position?

Financial Health Score

2/6

Financial Health Score 2/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: LFS's short term assets (A$6.6B) exceed its short term liabilities (A$1.3B).

Long Term Liabilities: LFS's short term assets (A$6.6B) exceed its long term liabilities (A$5.1B).

Debt to Equity History and Analysis

Debt Level: LFS's net debt to equity ratio (336.8%) is considered high.

Reducing Debt: Insufficient data to determine if LFS's debt to equity ratio has reduced over the past 5 years.

Debt Coverage: LFS's debt is not well covered by operating cash flow (7.3%).

Interest Coverage: Insufficient data to determine if LFS's interest payments on its debt are well covered by EBIT.

Balance Sheet

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Dividend

What is Latitude Group Holdings's current dividend yield, its reliability and sustainability?

Dividend Score

4/6

Dividend Score 4/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Future Dividend Coverage

12.56%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: LFS's dividend (11.8%) is higher than the bottom 25% of dividend payers in the Australian market (2.75%).

High Dividend: LFS's dividend (11.8%) is in the top 25% of dividend payers in the Australian market (6.87%)

Stability and Growth of Payments

Stable Dividend: Too early to tell whether LFS's dividend payments have been stable as they only just started paying a dividend.

Growing Dividend: Too early to tell if LFS's dividend payments are increasing as they only just started paying a dividend.

Earnings Payout to Shareholders

Earnings Coverage: At its current payout ratio (88%), LFS's payments are covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: With its reasonably low cash payout ratio (46.9%), LFS's dividend payments are well covered by cash flows.

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Management

How experienced are the management team and are they aligned to shareholders interests?

3.8yrs

Average management tenure

CEO

A. Fahour (55 yo)

3.75yrs

Tenure

AU$3,751,729

Compensation

Mr. Ahmed Fahour, BEc (Hons), MBA, FAIM, is a Director at Latitude Group Holdings Limited and has been its Managing Director and Chief Executive Officer since October, 2018. He has been Managing Director a...

CEO Compensation Analysis

Compensation vs Market: A.'s total compensation ($USD2.55M) is above average for companies of similar size in the Australian market ($USD1.04M).

Compensation vs Earnings: A.'s compensation has been consistent with company performance over the past year.

Leadership Team

Experienced Management: LFS's management team is considered experienced (3.8 years average tenure).

Board Members

Experienced Board: LFS's board of directors are considered experienced (5.3 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 3.8%.

Data	Last Updated (UTC time)
Company Analysis	2022/07/04 00:00
End of Day Share Price	2022/07/01 00:00
Earnings	2021/12/31
Annual Earnings	2021/12/31