WRLD

WRLD is a subprime installment lender whose FY2026 results show real cracks beneath the headline revenue uptick. Revenue grew 3.7% to $585M, but net income collapsed 61.2% to $34.6M and diluted EPS fell 57.6% to $6.88. Management attributes most of the income drop to a $59M personnel incentive expense tied to the reversal of prior stock-comp — a non-recurring optical hit — but the underlying credit picture is genuinely worse: provision for credit losses rose to 32.2% of revenue (vs. 30.0% and 27.4% in the prior two years), net charge-offs climbed to 18.5% of average net receivables (from 17.5%), and the CECL allowance grew to $111.9M. Return on average equity collapsed from 21.0% to 9.0%. Gross loans receivable have compounded down 4.27% annually since 2022, branches shrank again (1,009 vs. 1,024), and the company is shifting toward smaller, higher-yield (and higher-risk) loans.

The balance sheet is the bigger concern. Long-term debt jumped 31.1% to $587M while equity fell 19.7% to $351M — liabilities/equity is now 2.0x and cash is a thin $6M. The equity drawdown is largely self-inflicted: WRLD repurchased $132M of stock (up 144% YoY), shrinking shares 12.6% to 4.64M. That buyback is the entire reason EPS optics aren't worse, and it has levered the business into a deteriorating credit cycle. Risk Factors explicitly flag rate sensitivity (Fed stagflation concerns, possible further hikes) and persistent regulatory/headline risk around 'predatory' consumer installment lending — both directly threaten funding cost and the operating model.