SC

Santander Consumer USA Holdings Inc

Finance/Real Estate


Presented:03/18/2015
Price:$23.34
Cap:$8.16B
Current Price:$41.60
Cap:$12.73B

Presented

Date03/18/2015
Price$23.34
Market Cap$8.16B
Ent Value$8.16B
P/E Ratio10.9x
Book Value$10.20
Div Yield2.55%
Shares O/S349.71M
Ave Daily Vol1,620,000
Short Int1.58%

Current

Price$41.60
Market Cap$12.73B
Santander Consumer USA Holdings Inc., a specialized consumer finance company, provides vehicle finance and unsecured consumer lending products in the United States. The company’s vehicle finance products and services include retail installment contracts, vehicle leases, and dealer loans. It also originates vehicle loans through a Web-based direct lending program; purchases vehicle retail installment contracts from other lenders; and services automobile, and recreational and marine vehicle portfolios for other lenders. In addition, the company provides unsecured consumer loans, private label credit cards, and other consumer finance products. Santander Consumer USA Holdings Inc. was founded in 1995 and is headquartered in Dallas, Texas. Santander Consumer USA Holdings Inc. is a subsidiary of Santander Holdings USA, Inc.

Publicly traded companies mentioned herein: Banco Santander SA (SAN), Santander Consumer USA Holdings Inc (SC)

Highlights

The negative press and investigations surrounding the subprime auto segment of the market, and Santander Consumer USA (SC), have created a buying opportunity, in the presenter's opinion. SC is 60% owned by Santander, and 10% owned by its founder, Tom Dundon, and the presenter sees the business (including Sovereign) as a strategic, US-based asset for Santander. The auto lender’s model is similar to the credit card model in many ways (high margin, generally resilient business model over long periods of time, struggles when liquidity is an issue), but today SC has a scale and cost of financing advantage and "is in a better financial leverage/ liquidity position than subprime lenders of the past and credit quality is getting better, not worse”. The presenter sees earnings surpassing Street estimates over the coming year, and believes a more fair value for the stock is in the $30s (up from ~$23).

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Idea Discussion

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