Market Thoughts / CCRT

The markets are struggling so far this year because the economic news has been stronger than expected and pushed up bonds yields. Slow growth is your friend if you are long. Stronger economic data over the next few months may push out the big market gains into the second half of the year.

CCRT preannounced 4Q earnings below expectations due to 1) additional marketing expenses 2) higher expenses associated with new products and technology 3) slower growth within the auto finance segment and 4) higher depreciation associated with relocating the corporate headquarters. Higher credit costs do not appear to be an issue. The good news is that management is gearing up for growth and also reaffirmed its full year 07 guidance of ~$4.25 which appears conservative since it doesn’t include benefits from acquisitions or share repurchases. At $37.50, the stock trades at 8.8x 07 estimates, a very attractive price IMO.