Greenville consumer loan business led SC stocks in 1st half of 2019

As a whole, South Carolina-based stocks held their own in the first half of 2019. File/AP

Investors in an Upstate consumer loan business were in the money at the halfway point of 2019.

World Acceptance Corp. led the diminished lineup of South Carolina-based public companies during the January-June trading session. It registered a stock price gain of nearly 54% as Wall Street entered the 10th year of its marathon bull run.

That was more than enough to give it the pole position in the Palmetto State Index, which is down to 18 companies now that SCANA Corp. has been sold and Kemet Corp. has moved its headquarters to south Florida.

As a group, the value of the remaining hodgepodge of mostly lenders, manufacturers and technology firms rose slightly more than 19% through June.

Put another way, an investor who bought 10 shares of each South Carolina-based company listed on a major exchange on Jan. 2 would have paid roughly $6,925. The same stockpile was worth $8,264 as of June 30, according to pricing data from Google Finance.

The increase outpaced the much broader-based S&P 500, which was up 17% for the front half of the year, but was a few steps behind the Nasdaq, which climbed almost 21%.

The state’s biggest gainer opened its doors as World Finance in 1962 with four offices in its hometown of Greenville. The consumer lender got its first taste of the stock market with the help of a Charleston brokerage: Frost Johnson Read & Smith Inc. underwrote the company’s first public offering of 85,700 shares for $3.50 a pop in 1970.

The company changed hands in 1973, when Greenville’s Southern Bancorporation acquired the crosstown niche lender, and again in 1986, when the Southern Bank & Trust parent was sold to First Union Corp. Senior management bought World Acceptance three years later and took it public in 1991.

The chain has since grown to about 1,200 offices in 16 states, including 95 in South Carolina, and its typical loan is between $300 and $4,000. Revenue was up 8% in the company’s last fiscal year, but net income fell by 30% to $37 million, pulled down by a $36 million loss from the sale of its troubled Mexico operation.

World Acceptance has kept a mostly low profile over the years, though it made headlines in 2014 when the Consumer Financial Protection Bureau began looking into its marketing practices. The federal agency wrapped up the probe in early 2018 without taking any legal action.

About six months later, World Acceptance named a new president and CEO, Chad Prashad, a graduate of Presbyterian College in Clinton.

The stock price began to show fresh signs of life in March, rising from $110 to about $164 late last month. The run-up can’t be traced to any market-moving event, such as a big purchase or restructuring, though World Acceptance helped the cause by repurchasing 600,000 of its own shares in its most recent quarter.

In a May 9 conference call, Jefferies analyst Kyle Joseph asked about the recent “acceleration of growth,” which Prashad attributed to “a couple of acquisitions” along with stepped-up digital marketing efforts and more “word-of-mouth” referrals from customers.

Jones remained skeptical about the stock price.

“Fundamentally the business has improved to be more consistent with peers but not to the point of justifying the premium valuation,” he wrote in a research note the same day as the earnings call.

Among the rest of the Palmetto State stocks, a Charleston tech firm that makes software for philanthropic groups got its Wall Street groove back in the first half of 2019. Shares of Daniel Island-based Blackbaud Inc. were up 32% as of June 30, after taking a tumble late last year.

A cluster of five other companies also racked up healthy gains ranging from 25% to 30%, led by Delta Apparel, the Greenville-based owner of the Salt Life and Coast brands. Not far behind the clothing maker was Fort Mill paper giant Domtar; Spartanburg restaurant operator Denny’s; North Charleston chemical maker Ingevity Corp. and Pee Dee packaging giant Sonoco Products Co.

Another five bucked the broader market and lost value in the first six months of 2019, none more so than Benefitfocus Inc. Shares of the Daniel Island workplace software provider skidded in March and were down nearly 41% at the midpoint of the year.

That’s an abrupt about-face from 2018, when a 71% price jump made Nasdaq-listed BNFT the year’s top performer in South Carolina.

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