Atlanticus Holdings: Attractive 9.25% Yielding Baby Bond For Income Investors

2025-01-05 23:54:14 ET

Summary

• Atlanticus Holdings has shown strong growth and profitability in 2024, with total revenues increasing by over $110 million and net margin rising to $283 million.
• The company’s balance sheet growth, with loan investments increasing to $2.51 billion and debt growing to nearly $2.3 billion, supports its positive earnings.
• Atlanticus’ baby bonds offer a 9.25% yield to maturity, with operating cash flow growing to $346 million, ensuring sufficient coverage for debt obligations.
• Despite economic and regulatory risks, Atlanticus continues to control bad debts and generate enough cash flow, making its baby bonds attractive for income investors.

Introduction

Atlanticus Holdings ( ATLC ) is a niche consumer lending company. Atlanticus prides itself on serving customers who would otherwise be unable to obtain consumer loans. In addition to shares, the company offers preferred shares ( ATLCP ) and two different baby bonds (ATLCL) (ATLCZ). Back in April, I profiled the latter of the two baby bonds and its 9.25% coupon. Today, the baby bond is priced at par and still offers an attractive 9.25% yield to maturity for fixed income investors....

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