Shares of LendingClub (NYSE: LC) were moving higher today after the consumer lending and banking platform posted better-than-expected results in its first-quarter earnings report, easily beating estimates on the bottom line.
As of 11:48 a.m. ET Wednesday, the stock was up 12.7%.
Image source: Getty Images.
LendingClub shines in Q1
In a difficult environment for lenders, LendingClub delivered a solid round of results as its balance sheet grew from $8.8 billion in the prior quarter to $9.2 billion.
Book value per share also rose from $11.34 to $11.40, showing that the stock still trades at a substantial discount to its share price. Provision for credit losses also fell from $41.9 million to $31.9 million, showing its loan book is getting less risky. Loan originations were flat from the previous quarter at $1.6 billion.
As for financial results, LendingClub's revenue fell 26.5% from the quarter a year ago to $180.7 million, but the company substantially cut its credit loss provision from a year ago, finishing the quarter with earnings per share of $0.11, down from $0.13 in the prior-year quarter, but better than $0.09 per share in the the fourth quarter of 2023.
That result was much better than the analyst consensus of $0.03.
CEO Scott Sanborn said, "Our operating discipline, strong credit performance, and continued innovation are resulting in a sustainable operating rhythm that is delivering real value to our members."
What's next for LendingClub
LendingClub's guidance for the second quarter called for $1.6 billion to $1.8 billion in loan originations, an improvement from the first quarter, and pre-provision net revenue of $30 million to $40 million, which represents a substantial decline from the first quarter.
Higher interest rates have squeezed operators like LendingClub for the last several quarters, but investors should take comfort in the better-than-expected results and the discount to book value, which should eventually improve if the business executes effectively.
Should you invest $1,000 in LendingClub right now?
Before you buy stock in LendingClub, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and LendingClub wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.
*Stock Advisor returns as of April 30, 2024
Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
