PRL down almost 25% from its July high. What is going on here… Investor concern about bad loans? Are there any serious issues you see at the moment?
Thanks!
PRL has been facing some sentiment headwinds due to perception risk in the non-prime lending space, with economic data points coming in weaker-than-expected. It is also facing some sympathy sell pressure due to the short report on GSY. It operates in a space that benefited from higher rates, as consumers were pushed out to non-prime lending options, but with rates declining, there are fears that its sales could face pressure as a result.
Overall, we feel that fears around Canadian economic weakness are not well-supported, as only 2% of its sales come from Canada. It is also seeing rapid growth in its QuidMarket business in the UK, which is seeing strong economic growth right now. We feel that it could see some sales pressure due to the declining rate environment, but largely, management notes that growth expectations are still positive, and its LaaS and QuidMarket businesses are performing well. We think it has rebound potential in the coming months/year(s).