LAS VEGAS – Consumer Portfolio Services, Inc. (NASDAQ: CPSS), a specialty finance company, announced today the renewal of its revolving credit agreement with Citibank, N.A., ensuring the company's borrowing capacity for automobile receivables until mid-July 2026. The credit facility, secured by vehicle receivables acquired from dealers, offers CPS flexibility in its financing operations.
The renewed agreement permits CPS to continue borrowing on a revolving basis for the next two years, with the possibility of a one-year amortization period following the end of the revolving period. This financial arrangement is a key part of CPS's strategy to fund purchases of retail installment sales contracts, which are primarily secured by late-model used vehicles and, to a lesser extent, new vehicles.
Consumer Portfolio Services specializes in providing indirect automobile financing to individuals who have experienced credit challenges or have limited credit histories. The company operates by purchasing installment sales contracts from franchised automobile dealerships and funding these purchases through securitization markets.
The press release also included forward-looking statements regarding the expected two-year duration of the revolving period and the subsequent amortization phase. However, it noted the possibility of defaults or events that could curtail the revolving period or accelerate the loan maturity.
Such scenarios could arise from future losses related to receivable performance, increased consumer bankruptcy filings, regulatory changes, or broader economic downturns, particularly in regions where CPS's business is concentrated.
The information in this article is based on a press release statement from Consumer Portfolio Services, Inc.
InvestingPro Insights
Consumer Portfolio Services, Inc. (CPSS) has recently secured its financial position through the renewal of a crucial credit agreement, and a glance at the company's real-time data from InvestingPro shows a mixed financial landscape with some noteworthy highlights.
With a market capitalization of approximately $206.96 million, CPSS is trading at an earnings multiple of 5.73, which is relatively low, suggesting that the stock may be undervalued compared to its earnings potential. This aligns with one of the InvestingPro Tips, indicating that the company is trading at a low earnings multiple.
The company's P/E ratio has slightly adjusted in the last twelve months as of Q1 2024, standing at 5.96. While the PEG ratio in the same period indicates a negative value of -0.11, which may raise questions about future earnings growth expectations, CPSS has demonstrated a robust operating income margin of 24.41%. Moreover, the company has been profitable over the last twelve months, which is another positive sign for potential investors.
Despite the revenue decline of 18.86% in the last twelve months as of Q1 2024, CPSS's financial health is supported by its liquid assets, which exceed short-term obligations, a reassuring factor for creditors and investors alike. The company has shown a strong return over the last five years, as highlighted by InvestingPro Tips. It is worth noting that CPSS does not pay a dividend, which could be a strategic decision to reinvest earnings back into the company for growth or to maintain liquidity.
For those interested in a deeper analysis of Consumer Portfolio Services, there are additional InvestingPro Tips available that could provide further insights into the company's stock price volatility and other financial metrics. With the use of promo code PRONEWS24, readers can get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, unlocking access to a total of 6 exclusive InvestingPro Tips for CPSS at https://www.investing.com/pro/CPSS.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.