Astra Funding Inc. (NASDAQ: ASFI) is a small-cap with a market cap coming in at $116.99 million. Currently, the company is trading with a price to earnings ratio of 15.27 and a price to sales of 2.69. With an EPS of 0.59, price to book of 0.68, and quarterly profit margin of 25.92%, this company should appeal to potential investors. After all, it re-purchased approximately 172,000 shares of its common stock at a cost of $1.79 million.
Publilius Syrus, a Latin writer of maxims, said, “A small debt produces a debtor; a large one, an enemy.” Though he said this in the 1st century BC, his wise saying applies today. Asta Funding, Inc. does not care about making friends or enemies. It specializes in the purchase of consumer receivables. The company stands out also in the management of receivables such as MasterCard (NYSE: MA), Visa (NYSE: V), and other credit card accounts. It also liquidates loans issued by credit grantors and buys products such as distressed and non-conforming loans.
It reported net income of $882,000 for fiscal 2013 second quarter, compared with $2,460,000 for same period last year. Net income for the second quarter was $3,470,000, compared with $5,437,000 for same period last year. An impairment charge of $2,203,000 on three debt portfolios was responsible for the net income decline. Revenues for second quarter were $10,085,000, compared with $11,470,000 for the same period in the prior year.
“We are pleased with the results of the second quarter and six month period ended March 31, 2013 as we continue to generate strong cash flow and improve our liquidity position,” commented Gary Stern, Chairman and CEO of the Company. “As we continue our work in the debt collection business, we believe the quality of the legacy portfolio continues.”
Looking at the risks involved, the stock seems to be recovering from a bearish drop early in May. It may rise to a support of $9.20 as it looks to break out of the 52-day. Just like other companies, Astra has rivals. Encore Capital Group, Inc. (NASDAQ: ECPG) has a market cap of $817.34 million and a share price of $35.03. Portfolio Recovery Associates Inc.(NASDAQ: PRAA) has a market cap of $2.56 billion and a share price of $151.51. Astra will profit over the long haul as it has done over the past year. The balance of its debt to the Bank of Montreal (NYSE: BMO) was $56,823,000 as of March 31, 2013; down from $61,463,000. This will slow the company as it uses its cash reserve of $3.71 per share to innovate and boost its presence.
This is a play for investors who do not care about hurting friends and enemies when making money. But they should put it on their watch list until it solves its debt problems.