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Consumer Portfolio Services (CPSS)
NASDAQ:CPSS

Consumer Portfolio Services (CPSS) AI Stock Analysis

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Consumer Portfolio Services

(NASDAQ:CPSS)

Rating:75Outperform
Price Target:
$11.50
▲(14.89%Upside)
CPSS demonstrates strong technical momentum and strategic corporate moves that enhance its market position. Financial performance and earnings call insights show growth potential, tempered by profitability and debt challenges. Valuation remains fair, making it an attractive option for growth-focused investors.

Consumer Portfolio Services (CPSS) vs. SPDR S&P 500 ETF (SPY)

Consumer Portfolio Services Business Overview & Revenue Model

Company DescriptionConsumer Portfolio Services, Inc. operates as a specialty finance company in the United States. It is involved in the purchase and service of retail automobile contracts originated by franchised automobile dealers and select independent dealers in the sale of new and used automobiles, light trucks, and passenger vans. The company, through its automobile contract purchases, offers indirect financing to the customers of dealers with limited credit histories or past credit problems. It serves as an alternative source of financing for dealers, facilitating sales to customers who are not able to obtain financing from commercial banks, credit unions, and the captive finance companies. The company also acquires installment purchase contracts in four merger and acquisition transactions; purchases immaterial amounts of vehicle purchase money loans from non-affiliated lenders. and offers financing directly to sub-prime consumers to facilitate their purchase of a new or used automobile, light truck, or passenger van. It services its automobile contracts through its branches in California, Nevada, Virginia, Florida, and Illinois. The company was founded in 1991 and is based in Las Vegas, Nevada.
How the Company Makes MoneyCPS generates revenue primarily through the interest earned on the auto loans it finances. The company purchases retail installment sales contracts from dealerships at a discount and earns money by collecting interest payments from borrowers. Additionally, CPS derives income from servicing fees, which are fees charged for managing the loan accounts. The company may also earn revenue through the sale of loans to third-party investors, securitization of loan pools, and other financial activities related to its loan portfolio. Key factors contributing to its earnings include interest rate spreads, credit performance of the loan portfolio, and effective management of operating expenses.

Consumer Portfolio Services Earnings Call Summary

Earnings Call Date:May 19, 2025
(Q1-2025)
|
% Change Since: 14.27%|
Next Earnings Date:Jul 29, 2025
Earnings Call Sentiment Positive
The earnings call reflected a strong start to the fiscal year with significant revenue and portfolio growth, improved delinquency and charge-off rates, and record shareholders' equity. However, challenges included flat earnings per share, increased interest expenses, and a decline in fair value markup. Despite these challenges, the company maintained a positive outlook, expecting further growth and improvement in credit performance.
Q1-2025 Updates
Positive Updates
Strong Revenue Growth
Revenues increased by 17% to $106.9 million compared to $91.7 million in the first quarter of 2024.
Increase in Portfolio Size
Finance receivables at fair value increased by 24% to $3.45 billion compared to $2.79 billion as of March 31, 2024.
Record Shareholders' Equity
Shareholders' equity reached a record high of $298.4 million, a 7% increase over the previous year.
Originations Growth
Originations grew by 31.5% year-over-year with $451 million in new contracts compared to $346 million in the first quarter of 2024.
Improved Delinquency and Charge-off Rates
Total delinquency declined slightly to 12.35% from 12.39% year-over-year, and annualized net charge-offs improved to 7.5% from 7.84%.
Negative Updates
Flat Earnings Per Share
Diluted earnings per share remained flat at $0.19 compared to the first quarter of 2024.
Increased Interest Expenses
Interest expenses increased significantly to $55 million from $42 million, driven by higher rates and debt balance.
Decline in Fair Value Markup
Fair value markup decreased to $3.5 million from $5 million in the first quarter of the previous year.
Stable but Low Return on Managed Assets
Return on managed assets slightly decreased to 0.8% from 0.9% year-over-year.
Company Guidance
During the Consumer Portfolio Services 2025 First Quarter Operating Results Conference Call, management provided optimistic guidance, highlighting a strong start to the fiscal year with originations exceeding $100 million. Revenues for the first quarter reached $106.9 million, marking a 17% increase from the previous year, driven by interest on a $3.6 billion fair value portfolio yielding 11.4%. Expenses also rose by 17% to $100.1 million, primarily due to a higher interest expense of $55 million. Despite these increases, pretax earnings grew by 3% to $6.8 million, and net income increased by 2% to $4.7 million, translating to a flat diluted earnings per share of $0.19. The company reported a 24% growth in finance receivables at fair value to $3.45 billion and a 20% increase in securitization debt to $2.74 billion. Shareholders' equity reached a record high of $298.4 million, up 7% year-over-year. The net interest margin improved by 4% to $52 million, while core operating expenses rose by 3% to $46.1 million, accounting for 5.2% of the managed portfolio, a reduction from 6% last year. The return on managed assets was slightly lower at 0.8% compared to 0.9% in 2024. The company also noted operational efficiencies, with a consistent employee base of approximately 950, and highlighted a robust credit profile with average APR at 20.32%, loan-to-value ratios at 117-118%, and an average payment of $535. Total delinquencies and charge-offs showed slight year-over-year improvements, with annualized net charge-offs at 7.5%. The company emphasized strategic growth through experienced sales hires and partnerships, maintaining a focus on credit quality and operational efficiency amid macroeconomic uncertainties.

Consumer Portfolio Services Financial Statement Overview

Summary
Consumer Portfolio Services shows strong operating cash flows and revenue growth. However, it faces challenges with fluctuating profitability margins and reliance on debt for asset growth. Continued focus on net income enhancement and debt management is crucial.
Income Statement
68
Positive
The company has shown a mixed performance in terms of revenue growth, with a significant increase from 2023 to 2024, yet experiencing fluctuations in previous years. The gross profit margin remains strong, indicating effective cost management. However, the net profit margin has been volatile, showing a recent decrease due to rising expenses or other factors impacting net income. EBIT and EBITDA margins are moderate, reflecting steady operational efficiency but with room for improvement.
Balance Sheet
55
Neutral
The balance sheet reflects a strong equity base with a low debt-to-equity ratio, especially in 2024, which indicates reduced financial leverage and lower risk. However, the equity ratio has been modest, suggesting that a significant portion of assets is financed by debt. Return on equity has shown variability, highlighting challenges in achieving consistent profitability relative to equity.
Cash Flow
72
Positive
The cash flow statement demonstrates robust operating cash flow generation, supporting strong free cash flow figures. There is a positive trajectory in free cash flow growth, indicating efficient cash management and capacity to fund operations without reliance on external financing. The operating cash flow to net income ratio is solid, suggesting effective conversion of earnings into cash.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue408.64M185.46M340.01M329.71M267.81M169.82M
Gross Profit294.34M185.46M208.23M234.65M207.16M162.40M
EBITDA125.34M28.29M61.94M117.81M67.42M0.00
Net Income19.31M19.20M45.34M85.98M47.52M21.68M
Balance Sheet
Total Assets3.67B3.49B2.90B2.75B2.16B2.15B
Cash, Cash Equivalents and Short-Term Investments29.84M11.71M6.17M13.49M29.93M13.47M
Total Debt0.003.13B2.57B2.47B1.95B1.97B
Total Liabilities3.38B3.20B2.63B2.52B1.99B2.01B
Stockholders Equity298.43M292.77M274.67M228.39M170.21M133.36M
Cash Flow
Free Cash Flow254.95M233.32M237.42M213.78M196.22M238.74M
Operating Cash Flow254.92M233.75M237.98M215.93M198.19M238.77M
Investing Cash Flow-855.19M-769.71M-359.53M-713.90M-115.36M93.03M
Financing Cash Flow632.80M547.92M84.19M484.21M-50.44M-328.48M

Consumer Portfolio Services Technical Analysis

Technical Analysis Sentiment
Positive
Last Price10.01
Price Trends
50DMA
9.36
Positive
100DMA
9.38
Positive
200DMA
9.93
Positive
Market Momentum
MACD
0.20
Negative
RSI
58.65
Neutral
STOCH
72.67
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CPSS, the sentiment is Positive. The current price of 10.01 is above the 20-day moving average (MA) of 9.84, above the 50-day MA of 9.36, and above the 200-day MA of 9.93, indicating a bullish trend. The MACD of 0.20 indicates Negative momentum. The RSI at 58.65 is Neutral, neither overbought nor oversold. The STOCH value of 72.67 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CPSS.

Consumer Portfolio Services Risk Analysis

Consumer Portfolio Services disclosed 32 risk factors in its most recent earnings report. Consumer Portfolio Services reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Consumer Portfolio Services Peers Comparison

Overall Rating
UnderperformOutperform
Sector (67)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
75
Outperform
$215.81M12.576.69%13.23%-47.36%
OFOFS
70
Outperform
$113.21M3.7519.56%15.93%-49.04%
69
Neutral
$139.96M19.883.63%15.48%127.09%2519.30%
67
Neutral
$17.01B11.909.70%3.76%11.63%-9.47%
62
Neutral
$309.69M13.565.50%-3.14%264.15%
51
Neutral
$161.31M579.49-0.32%18.58%-338.17%-97.99%
MBMBI
28
Underperform
$222.14M26.69%583.33%6.59%
* Financial Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
CPSS
Consumer Portfolio Services
10.01
0.53
5.59%
MBI
MBIA
4.41
-0.85
-16.16%
ONIT
Onity Group
38.67
15.70
68.35%
OXSQ
Oxford Square Capital
2.26
-0.30
-11.72%
OFS
OFS Capital
8.45
1.04
14.04%
MRCC
Monroe Capital
6.46
-0.07
-1.07%

Consumer Portfolio Services Corporate Events

Business Operations and Strategy
Consumer Portfolio Services Highlights AI in Loan Management
Positive
May 19, 2025

Consumer Portfolio Services has released an updated investor presentation as of March 2025, highlighting its strategic use of machine learning and artificial intelligence to enhance loan quality and risk management. The company emphasizes its strong market position with a 54-quarter profitability streak and a significant presence in the sub-prime auto financing sector, indicating robust demand for its lending programs and a solid operational framework.

Private Placements and FinancingBusiness Operations and Strategy
Consumer Portfolio Services Closes Major Securitization Deal
Positive
May 13, 2025

On May 12, 2025, Consumer Portfolio Services, Inc. announced the closing of its second term securitization in 2025, marking its 55th senior subordinate securitization since 2011. The transaction involved the sale of $419.95 million in asset-backed notes, secured by $439.29 million in automobile receivables, and was rated highly by Standard & Poor’s and DBRS Morningstar. This securitization is significant for CPS as it continues to strengthen its position in the market by securing financing through structured transactions, which are crucial for its operations and growth strategy.

Executive/Board ChangesFinancial Disclosures
Consumer Portfolio Services Finalizes 2024 Executive Compensation
Neutral
May 5, 2025

Consumer Portfolio Services, Inc. has finalized the non-equity incentive plan compensation for its executive officers for the fiscal year 2024. The company updated its Summary Compensation Table to include these amounts, which were not available when the initial 2024 10-K was filed. The CEO’s total compensation for FY2024 was $4,165,611, resulting in a CEO pay ratio of 55.5 to 1, calculated against a newly identified median employee due to changes in employment status.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jun 13, 2025