CCP
Team invest recommend - aug 2026
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Credit Corp Group Limited (ASX:CCP) is an Australian financial services company based in Sydney. It is the country's largest debt buyer and collector. The company buys past-due consumer and small business debts from banks, utility companies, and phone providers, and then works with people to set up affordable payment plans. [1, 2, 3, 4]
This company does well when it can buy debtors ledgers easily. It does well in poor economic conditions.
Has a big database of consumer behavior (esp default behavior)... it can price its debt legers well.
Main Business Areas
- Debt Buying: Purchases overdue debt portfolios from major lenders in Australia, New Zealand, and the United States.
- Debt Collection: Collects money on those unpaid debts or handles collection services for other clients.
- Consumer Lending: Offers short-term loans and car finance products for people who may have poor credit histories and cannot use standard banks, operating brands like Wallet Wizard and CarStart
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Over the last five years (FY2021 to FY2026), Credit Corp Group Limited (ASX: CCP) experienced a mid-period earnings dip due to lending adjustments and provisioning, but fully rebounded by FY2026 to post a record Net Profit After Tax (NPAT) of $105.5 million and revenue of $586 million. [1, 2]
Profit & Revenue Trends
- Revenue Growth: Grew steadily from approximately $418 million in FY2023 and $546 million in FY2025 to a high of $586 million in FY2026.
Debt & Gearing
- Long-term Debt: Rose from roughly $335 million in FY2023 to around $419 million by FY2025, supporting ongoing purchased debt ledger (PDL) investments. [1]
- Gearing: Maintained a disciplined capital structure, operating at a pro-forma gearing level around 40% of the carrying value of financial assets into FY2026. [1, 2]
- It's Debt/Equity ratio in 2026 was 0.54
- https://stockanalysis.com/quote/asx/CCP/statistics/
Return on Equity (ROE)
- Volatility: Peaked at roughly 14.3% in FY2022.
- Trough: Slipped to a 5-year low of 3.5%–6.2% during the FY2024 earnings slump.
- Recovery: Recovered to 10.6% in FY2025 and bounced back further to approximately 13% in FY2026 driven by strong US debt-buying performance
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The Price-to-Earnings (P/E) ratio for Credit Corp Group Limited (ASX: CCP) over the last 10 years has a long-term historical mean of 20.26 and a 10-year median of 17.26, trading between a minimum of 6.96 and a maximum of 132.35 over the broader decade-long cycle. [1, 2]
The company's P/E ratio compressed significantly due to asset impairment adjustments, changing debt-ledger dynamics in the US, and a cycle of lower core earnings, which left the stock trading historically cheap. [1]
📊 Historical P/E Ratio Data (Year-End Estimates)
The following table outlines the approximate trailing P/E ratios for Credit Corp (ASX: CCP) at the close of each recent financial year:
| Calendar/Financial Year | Approximate P/E Ratio | Valuation Context / Market Trend |
|---|---|---|
| 2026 (Current) | 8.6x | Depressed valuation following a 12% rebound in NPAT. |
| 2025 | 10.5x | Deep valuation discount from ledger impairment impacts. |
| 2024 | 20.2x | High variance following a cyclical peak and subsequent correction. |
| 2023 | 14.3x | Traded closer to historically normalized levels. |
| 2022 | 12.5x | Correction phase post-COVID consumer metrics shock. |
| 2021 | 22.7x | Spike driven by strong government stimulus supporting consumer repayments. |
| 2020 | 13.7x | Broad pandemic market sell-off low. |
| 2019 | 14.8x | Normalized growth valuation in line with long-term trends. |
| 2018 | 20.1x | Premium pricing reflecting multi-year ledger growth. |
| 2017 | 18.5x | Expansion of the company's US operations. |
| 2016 | 15.2x | Stable operating environment with standard credit deployment. |
🔍 Strategic Investment Overview & Risk Framework
Before assessing ASX: CCP as a value play based on its low P/E, implement the following evaluation checklist:
- Debt Ledger Cycles: Debt collectors like Credit Corp rely on buying delinquent ledgers from banks. If macroeconomic conditions lower banks' charge-off rates, supply drops, increasing ledger costs and depressing future earnings. [1, 2, 3]
- US Geographic Risk: A significant driver of CCP's historical valuation volatility has been its operational expansion into the highly competitive US market. Ensure you contrast Australian division performance with US returns to verify where margin degradation occurs. [1, 2]
- Capital At Risk Statement: Concentrating capital in deep value or structurally challenged sectors carries a high risk of "value traps." Always ensure single-asset exposure is constrained to a minority percentage of a broadly diversified portfolio to prevent total capital destruction.
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Over the last 10 years, Credit Corp Group (ASX:CCP) has experienced a narrowing and recent negative spread between its Return on Invested Capital (ROIC) and Weighted Average Cost of Capital (WACC), with current trailing metrics (2025)showing an ROIC of approximately 6.90% to 9.66% against a WACC of roughly 13.06%, indicating that recent returns have fallen below its cost of capital. [1, 2]
- https://stockanalysis.com/quote/asx/CCP/statistics/
- 2026 - ROIC = 7.51% , WACC = 6.98% ... Are things starting to move in the right direction?
10-Year Trend Context
- Historical Performance (First Half of the Decade): For most of the past decade, Credit Corp maintained a strong core business model in debt ledger purchasing, generating historical ROIC levels that comfortably exceeded or met its cost of capital, allowing the firm to compound economic value. []
- Recent Compression (Second Half of the Decade): Headwinds in consumer lending, lower operational cash flow margins, and higher blended financing costs pushed WACC higher (hovering near a 10-year median of 13.00%–13.06%). [1, 2]
- Current Spread Dynamics: With ROIC lagging in the 7%–9% range and WACC around 13%, the negative spread signifies that the company has recently been in a value-destroying phase on an incremental capital-returns basis, working through normalization in its US and ANZ ledger buying segments
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ARGO vs CCP buffett style 2026 sept
Comparing Argo Investments (ASX:ARG) and Credit Corp Group (ASX:CCP) from a Buffett-style value perspective highlights a fundamental contrast between a diversified holding company and a high-ROE consumer finance operator. [1, 2]
Warren Buffett evaluates businesses based on their economic moats, predictable earnings growth, and the ability to convert retained capital into compounding shareholder value. [1, 2]
The structural and quantitative performance metrics of both companies over a 10-year horizon breakdown as follows:
Fundamental Comparison
| Metric | Argo Investments (ASX:ARG) | Credit Corp Group (ASX:CCP) |
|---|---|---|
| Business Type | Listed Investment Company (LIC) | Debt Buyer & Consumer Lender |
| P/E Ratio (TTM) | ~27.1x (Highly elevated relative to historical median) | ~9.1x (Compressed due to cyclical recovery) |
| Dividend Yield (TTM) | 4.2% (Fully Franked) | 5.5% - 6.4% (Fully Franked) |
| 10-Year Dividend Growth | Low growth (~1.8% to 2.7% CAGR) | Volatile but higher long-term trend (~9.2% 3Y CAGR) |
| 10-Year Capital Return | Steady compounding (~26.6% absolute price growth) | Cyclically volatile (-38% over last 5 years, higher baseline) |
| Buffett Analogy | Like a mini-Berkshire portfolio (sans the wholly owned subsidiaries) | Like a high-risk financial specialist (e.g., Berkshire's insurance/credit setups) |
Buffett Style Analysis Breakdown
1. The P/E Ratio & Margin of Safety
- ASX:ARG: At 27.1x earnings, Argo is trading significantly above its 10-year historical median (~25.5x). From a Buffett perspective, this compresses the "margin of safety." Because ARG tracks blue-chip equities (CBA, BHP, CSL), you are essentially paying a massive premium for an underlying portfolio that is currently highly priced. [1, 2, 3]
2. Dividend Yield vs. Retained Capital Reinvestment
- ASX:ARG: Offers a highly predictable 4.2% fully franked yield. However, its payout ratio sits above 100% of its standalone cash flows. Since it distributes almost everything it earns, it retains almost zero capital to grow organically. [1, 2, 3]
- ASX:CCP: Currently boasts a forward dividend yield above 6.4%, backed by a conservative ~44% to 50% payout ratio. CCP safely retains roughly half its profits to reinvest directly back into ledger acquisition and ledger expansion (especially in the US market). This satisfies Buffett's criteria of building intrinsic value through retained earnings. [1, 2, 3, 4, 5, 6]
3. Dividend Growth (The Shareholder Yield)
- ASX:ARG: Over the long-term 10-year frame, its dividend growth has been sluggish at roughly 1.8% to 2.7% per annum, barely matching baseline inflation. It behaves like a bond surrogate.
- ASX:CCP: CCP's dividend growth is far more volatile because it is tied directly to cyclical consumer delinquency trends and profit performance. While its dividend was slashed during recent credit tightening cycles, its historical bounce-back capacity has driven recent 3-year dividend growth up by 9.28% as profit recovered by 12% in FY26. [1, 2, 3, 4, 5, 6, 7]
4. The Moat (Competitive Advantage)
- ASX:ARG: Does not possess a structural moat; it possesses scale, low costs (0.14% management fee), and centuries of market trust. It cannot generate returns greater than the broader ASX 200 index over time.
The Verdict: Who Wins the Buffett Test?
If Warren Buffett had to choose between the two at today's pricing, Credit Corp (ASX:CCP) aligns more closely with a classic Buffett contrarian play.
While Argo acts as an exceptionally safe, reliable blue-chip safe haven, its current high multiple combined with an unsustainable payout ratio (>100%) limits long-term wealth compounding. Credit Corp, despite its inherent cyclicality, presents a massive margin of safety at 9.1x P/E, generates double-digit ROE, and maintains a massive 6%+ forward dividend yield while still retaining half its profits to compound intrinsic growth. [1, 2, 3, 4, 5, 6, 7, 8, 9, 10]
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More Buffett analysis
An analysis of Credit Corp Group Limited (ASX: CCP) reveals a stark shift in structural profitability over the last decade and a capital allocation strategy that diverges sharply from standard Buffett-style benchmarks. [1, 2]
Part 1: Historical ROE Trends (2017–2026)
Historically a high-return darling of the ASX, CCP's Return on Equity (ROE) has gone through distinct phases. Warren Buffett looks for companies capable of maintaining a stable ROE above 15% (ideally 20%+) without relying on excessive leverage
- The Moat Phase (2017–2019): CCP comfortably cleared the Buffett baseline, peaking at 22.4%. This reflected its dominant position in the domestic debt ledger purchasing market, where low competition allowed high cash collections relative to the capital deployed. [1]
- The Cyclical Shock & U.S. Expansion (2020–2024): Profits were hit hard during COVID-19 (2020) due to government stimulus pausing debt collection. While it recovered slightly, ROE steadily eroded, bottoming out at 6.1% in FY2024. This structural decline was driven by aggressive, less-profitable ledger pricing in the U.S. and severe domestic regulatory/operational headwinds. [1, 2]
Part 2: Capital Allocation vs. Buffett Benchmarks
| Buffett Capital Allocation Criteria | Standard Buffett Benchmark | Credit Corp Group (ASX: CCP) Execution |
|---|---|---|
| 1. Organic Reinvestment | Prioritize internal growth if incremental returns remain high ($1 retained = >$1 market value). | Mixed. CCP aggressively allocated capital to expand its US Debt Buying footprint and consumer lending (Wallet Wizard). However, this expansion diluted overall corporate ROE rather than compounding it. |
| 2. Share Buybacks | Buy back stock only when trading below a conservative estimate of intrinsic value. | Weak focus. Despite its stock collapsing from historic highs to cross near tangible book value (~1.0x P/TBV in recent cycles), CCP historic capital choices leaned heavily toward ledger acquisition over opportunistic buybacks. |
| 3. Dividend Discipline | Pay out cash only when the business cannot find internal high-return deployment options. | Divergent. CCP operates with a sticky 50% dividend payout ratio. Offering a ~6.0% franked yield satisfies income-focused ASX investors but violates Buffett's preference to withhold payouts if organic opportunities exist. |
| 4. Leverage Alignment | Maintain a conservative capital structure; avoid reliance on volatile debt lines. | Moderate Risk. For FY2026, CCP holds $486.1M in long-term debt against $913.9M in equity. While manageable, its model requires drawing debt to fund ledger books, contrasting with Buffett’s fortress balance sheet preferences. |
The Verdict
From a pure Buffett perspective, Credit Corp behaves like a mature corporate hybrid rather than a compounded wealth engine. While its recovery to an 11.5% ROE in FY2026 proves operational resilience, its decision to expand into lower-returning international territories while paying half its earnings as dividends indicates it lacks the structural moat and pure allocation discipline Buffett typically requires. [1, 2, 3, 4]
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