$78.89
$221.59
bear $78.89
base $150.51
bull $221.59
margin of safety $50.00
market price* $171.64
World Acceptance makes small, fixed-payment installment loans (typically $400 to $5,300; the average new loan was about $2,000 in fiscal 2026) to borrowers with limited access to mainstream credit, through 1,009 World Finance branches in 16 states, with more than 100 branches each in Texas and Georgia. It also sells credit insurance on larger loans and prepares tax returns. Its fiscal year ends March 31. Revenue has been essentially flat for a decade ($532 million in fiscal 2017, $585 million in fiscal 2026) while the branch count fell from 1,193 in 2019 to 1,009. Per-share results have been driven by buybacks, which cut the share count from about 9.2 million in fiscal 2019 to about 4.66 million shares outstanding in July 2026, financed partly with borrowing. How we measure earnings. Because this is a lender, reported operating cash flow adds back the loan-loss provision and the amortization of loan-origination costs. Both are real, recurring costs of making loans, so we treat them as costs. On that basis owner earnings (after interest, stock compensation and maintenance spending) were: fiscal 2017 $75M, 2018 $63M, 2019 $72M, 2020 $31M, 2021 $97M (government stimulus held losses down), 2022 $47M, 2023 $20M (the post-stimulus loss cycle), 2024 $92M, 2025 $93M and 2026 $37M. Stock compensation swings these figures sharply. Performance-share awards were expensed at $18-29M a year in fiscal 2020-2022, then largely reversed in fiscal 2024-2025 (a $19.7M credit in 2025), and the charge rose again to $19.3M in fiscal 2026. The net cost over the ten years averaged about $10M a year, and we use $14M as the ongoing cost, between that average and the current accrual. Interest cost roughly doubled, from $18-26M a year before fiscal 2022 to $43-50M since fiscal 2023, because rates rose and borrowing funded buybacks. Restating each of the last ten years for today's interest burden and a $14M stock-compensation cost gives a range of $15M (fiscal 2023) to $84M (fiscal 2021), with a median near $44M and an average near $47M. We use $46M a year (about $9.90 per share) as the normal earning power of the business as it stands. Fiscal 2026 came in below that ($43M on the same basis, $37M as reported) because the loss provision rose to 32% of revenue, up from 27% in fiscal 2024. The first quarter of fiscal 2027 (to June 30, 2026) showed the provision falling to $43.8M from $50.5M a year earlier and net income of $6.1M versus $1.6M. That is why we do not treat fiscal 2026 as the new normal, although one quarter is not enough to raise the level. Debt. The loan book ($1.29 billion gross at June 30, 2026) is funded by $573M of bank borrowings. These are a BMO-led revolving credit facility maturing July 22, 2028 (8.3% effective cost in fiscal 2026) and a $175M warehouse facility maturing September 29, 2027. The 7% senior notes were fully redeemed in August 2025. For a lender, borrowing is the raw material of the business, so every value below is already after all interest; the $573M owed is paid for inside these figures and is not subtracted a second time. What binds are the covenants: minimum net worth of $325M (equity was $362M at June 30, 2026), total debt no more than 225% of adjusted net worth, and a fixed-charge coverage ratio of 2.25x. Lenders temporarily relaxed that ratio in May 2026 to 2.20x, 2.10x and 2.15x for the March, June and September 2026 quarters, reverting to 2.25x from December 2026. That waiver, and the fact that all funding is now from banks and matures in 2027-2028, matter most in the downside case. Tangible equity is about $351M, roughly $75 per share. Base case, $150.51 per share. Owner earnings hold at about $46M a year for ten years. No growth is credited: revenue has not grown in a decade, the branch network is shrinking, and new-customer growth, higher yields or margin recovery are not secured. After year ten earnings decline about 1% a year, in line with the branch consolidation seen since 2019. What sustains them is the licensed branch network and repeat-borrower base the company has run through every cycle since the 1960s. The base already allows for an average credit cycle, because the $46M level comes from a ten-year window that includes the 2020 shutdown and the 2022-23 loss cycle. Bear case, $78.89 per share. Earnings stay at the fiscal 2026 level (about $37M with stock compensation at today's accrual) for two years. Then comes one loss cycle as deep as the one the company actually went through in fiscal 2023, when the provision reached 42% of revenue and owner earnings fell to about $15M on today's basis, here arriving around fiscal 2029. The fixed-charge covenant already needed a waiver in an ordinary year, so the bear assumes a breach in that downturn and costlier refinancing of the revolver around its July 2028 maturity. That costs roughly $7M a year after tax for three years and leaves the trough year near $8M. Earnings recover to about $30M. Then from fiscal 2032 another of its states adopts a 36% rate cap, as Illinois did in 2021 and New Mexico in 2023, leaving the business at about $28M a year and shrinking 3% a year after year ten as branches close. Even in the trough year, earnings before interest (about $57M) cover the roughly $49M interest bill. The short-dated loan book can be run down to repay lenders without a forced equity raise, and equity stays above the $325M covenant floor once buybacks stop. The bear value sits slightly above tangible book because the company has been profitable in each of the last twelve fiscal years, including the 2020 shutdown and the fiscal 2023 trough (net income $21M). In a downturn it has earned capital rather than consumed it, and its branch network and customer relationships are not on the balance sheet. Bull case, $221.59 per share. Credit costs return to the fiscal 2024-2025 range (provision about 27-30% of revenue), supported by the improving first quarter and the shift toward smaller, higher-yield loans (large loans fell from 48.5% to 44.7% of the portfolio in fiscal 2026). That puts owner earnings near $62M a year at today's interest cost, held flat thereafter with no growth credited. On the same basis, fiscal 2024 and 2025 earned $76M and $54M, so this level has already been reached under current funding conditions. Changes since our previous analysis. The earlier figures were built on a different basis and are not comparable. Since then the company named John L. Calmes Jr., a long-time executive, President and CEO effective September 21, 2026, ending the interim leadership that followed the prior CEO's departure, and first-quarter credit results improved. The fiscal 2026 annual report also recorded an immaterial correction to the timing of tax-preparation fee revenue. No restatement was required and no material weakness was reported. What could make this wrong. The biggest risk is a federal 36% annual rate cap. About $790M of the $1.28 billion loan book carries rates above 36%, and the company states that such a cap would almost certainly end its current operations. No case models this. If it happened, shareholders would be left with roughly the tangible equity less wind-down costs. Other risks: stock compensation staying near $20M a year (base value about $131), that plus credit costs staying at fiscal 2026 levels (about $120), and an affiliated investor group, Prescott General Partners, owning about 46% of the shares; it sold $60M of stock back to the company in September 2025. Margin-of-safety price, $50. How sure are we of the earnings level? Moderately. On our basis the business has earned between about $20M and $97M a year over the last decade, swung by credit cycles and stock-compensation accounting, but it has not lost money in any of those years. The worst plausible event is a national rate cap. The structure would survive it in the sense that the loan book is short and turns into cash, but the earning power would largely disappear, leaving something near tangible equity. If we are wrong about both stock compensation and credit costs, the shares are worth about $120. If a downturn hits during the 2027-2028 bank refinancing, they are worth about $79. The company pays no dividend. Owners are paid through buybacks and retained earnings, about $9-10 per share in a normal year, and covenants limit how much can be returned. At $50 a share, normal earnings alone equal about 20% of that price each year whether or not the share price ever reflects value. The downside case's $79 would still imply about 20% a year if recognized within two and a half years, and about $75 a share of tangible equity, mostly loans that convert to cash, stands behind the price. Above $50, a downturn that coincides with the bank refinancing would leave too little margin to earn 20%.