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1. Company Snapshot

1.a. Company Description

Consumer 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.

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1.b. Last Insights on CPSS

Consumer Portfolio Services, Inc. (CPS) has demonstrated resilience in recent months, driven by strategic financial maneuvers. The company's Q2 2025 earnings report revealed a net income of $4.8 million, or $0.20 per diluted share, marking a slight increase from the previous year. Furthermore, CPS secured a new two-year revolving credit agreement worth $167.5 million, enhancing its liquidity. Additionally, the company successfully closed a $384.6 million senior subordinate asset-backed securitization, its 57th since 2011, with a triple "A" rating from two rating agencies.

1.c. Company Highlights

2. Consumer Portfolio Services Delivers Solid Q1 Earnings Amidst Macro Challenges

Consumer Portfolio Services (CPSS) reported a robust first quarter in 2025, with revenues rising 17% year-over-year to $106.9 million, driven by a 31.5% increase in originations to $451 million. The company maintained its disciplined approach to credit quality, as evidenced by declining delinquencies (12.35%) and charge-offs (7.5%). Pretax earnings grew 3% to $6.8 million, while net income increased 2% to $4.7 million. However, EPS remained flat at $0.19, slightly below analyst estimates of $0.30, reflecting higher operating expenses tied to portfolio expansion.

Publication Date: May -14

📋 Highlights
  • Strong Originations Growth: - Originations reached $451 million, a 31.5% year-over-year increase, driven by robust performance in the first quarter.
  • Revenue Growth: - Revenues rose 17% to $106.9 million, supported by a high-yielding portfolio with a fair value yield of 11.4%.
  • Portfolio Expansion: - The managed portfolio grew 24% to $3.45 billion, reflecting strong portfolio expansion and credit quality improvements.
  • Improved Credit Metrics: - Delinquencies decreased to 12.35%, and charge-offs improved to 7.5%, showcasing better credit performance.
  • Strong Financial Position: - Cash holdings increased to $183.5 million, and shareholders' equity reached a record $298.4 million, highlighting financial stability.

Operational Strengths and Credit Resilience

The managed portfolio expanded 24% year-over-year to $3.45 billion, supported by stringent underwriting practices and operational efficiencies. The company highlighted the success of its AI voice agents and strategic hiring, which helped manage the growing portfolio despite higher interest rates. CFO, Charles Hunt, noted, "Our focus remains on balancing growth with credit quality, ensuring we are well-positioned to capitalize on potential interest rate declines." This strategy appears to be paying off, as the portfolio's credit metrics continue to improve.

Valuation and Growth Outlook

CPSS trades at a P/E ratio of 10.44 and a P/B ratio of 0.68, reflecting a reasonable valuation given its growth prospects and strong balance sheet. The company's free cash flow yield of 125.8% underscores its ability to generate significant cash, while a negative net debt-to-EBITDA ratio of -0.17 highlights its conservative leverage. Analysts expect revenues to grow 15.7% next year, supported by continued portfolio expansion and a stable securitization market.

Management's Strategic Focus

Looking ahead, management emphasized its commitment to controlling portfolio growth and maintaining credit discipline. The company remains optimistic about the broader economic outlook, citing low unemployment rates as a key tailwind. While EPS missed estimates this quarter, CPSS's strong financial position and improving credit trends suggest it is well-equipped to navigate macro uncertainties and deliver long-term value for shareholders.

3. NewsRoom

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Black Diamond Announces Intent to Vote “Against” CPSS Equity Incentive Plan

Nov -12

Source: businesswire.com

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Consumer Portfolio Services, Inc. (CPSS) Q3 2025 Earnings Call Prepared Remarks Transcript

Nov -11

Source: seekingalpha.com

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CPS Announces Third Quarter 2025 Earnings

Nov -10

Source: globenewswire.com

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CPS to Host Conference Call on Third Quarter 2025 Earnings

Nov -07

Source: globenewswire.com

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CPS Announces $384.6 Million Senior Subordinate Asset-Backed Securitization

Oct -23

Source: globenewswire.com

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CPS Announces Closing of $167.5 Million Credit Facility

Oct -23

Source: globenewswire.com

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Consumer Portfolio Services to Present at the 2025 Gateway Conference on September 3rd

Aug -26

Source: globenewswire.com

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CPS Announces Second Quarter 2025 Earnings

Aug -11

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.50%)

6. Segments

Retail Automobile Installment Sale Contracts

Expected Growth: 8.5%

Growing demand for financing options among subprime consumers, increasing vehicle sales, and rising popularity of flexible payment plans drive the growth of Retail Automobile Installment Sale Contracts.

7. Detailed Products

Auto Loans

Consumer Portfolio Services, Inc. offers auto loans to individuals and dealerships, providing financing options for new and used vehicles.

Subprime Auto Loans

CPS specializes in subprime auto loans, catering to customers with poor or no credit history, providing them with financing options for vehicle purchases.

Floor Plan Financing

CPS provides floor plan financing to dealerships, enabling them to purchase and stock inventory, and manage their cash flow effectively.

Portfolio Servicing

CPS offers portfolio servicing, managing and collecting payments on behalf of lenders and investors, ensuring timely and efficient loan servicing.

8. Consumer Portfolio Services, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Consumer Portfolio Services, Inc. is medium due to the availability of alternative financial services and products.

Bargaining Power Of Customers

The bargaining power of customers for Consumer Portfolio Services, Inc. is low due to the company's strong brand reputation and customer loyalty.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Consumer Portfolio Services, Inc. is medium due to the company's dependence on a few key suppliers for its operations.

Threat Of New Entrants

The threat of new entrants for Consumer Portfolio Services, Inc. is high due to the relatively low barriers to entry in the financial services industry.

Intensity Of Rivalry

The intensity of rivalry for Consumer Portfolio Services, Inc. is high due to the highly competitive nature of the financial services industry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 90.34%
Debt Cost 7.69%
Equity Weight 9.66%
Equity Cost 14.08%
WACC 8.30%
Leverage 935.08%

11. Quality Control: Consumer Portfolio Services, Inc. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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LendingClub

A-Score: 4.4/10

Value: 6.6

Growth: 3.9

Quality: 6.6

Yield: 0.0

Momentum: 6.5

Volatility: 3.0

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Mill City Ventures III

A-Score: 4.2/10

Value: 1.6

Growth: 5.4

Quality: 8.2

Yield: 0.0

Momentum: 10.0

Volatility: 0.0

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PRA Group

A-Score: 4.2/10

Value: 9.3

Growth: 2.6

Quality: 7.9

Yield: 0.0

Momentum: 1.5

Volatility: 3.7

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CPI Card Group

A-Score: 3.8/10

Value: 8.4

Growth: 6.4

Quality: 4.7

Yield: 0.0

Momentum: 1.0

Volatility: 2.3

1-Year Total Return ->

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Consumer Portfolio Services

A-Score: 3.8/10

Value: 7.3

Growth: 5.0

Quality: 4.8

Yield: 0.0

Momentum: 2.0

Volatility: 3.7

1-Year Total Return ->

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Nicholas Financial

A-Score: 3.3/10

Value: 8.2

Growth: 0.3

Quality: 4.6

Yield: 0.0

Momentum: 5.0

Volatility: 1.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

8.6$

Current Price

8.6$

Potential

-0.00%

Expected Cash-Flows