Q: I have taken a loss on this stock and am wondering whether to sell or hold? What are the prospects for the stock?
5i Research Answer:
PRL has declined partially in sympathy with GSY as many investors group the two together, but also it does have some concerns of rising provision for credit losses, and earnings estimates have pulled back. But we continue to like PRL's long-term story, revenue is growing fast, it is profitable, and trades at a reasonable valuation of 8X forward earnings with a yield of 2.6%. We would hold rather than sell at these levels given the valuation, but we would wait for Q1 results on May 4 before adding, as that report will tell us whether credit quality is improving or deteriorating further.