WRLD

We rate WORLD ACCEPTANCE CORP (WRLD) as Avoid with a composite score of 31.3/100 at a current price of $127.77. The stock falls in the bottom quintile of our universe across key quantitative factors, and the multi-factor weakness suggests a high probability of continued underperformance.

The rating is primarily driven by strength in investment (42th percentile) and value (29th percentile), which together account for the majority of the composite score. Offsetting weakness in stability (18th percentile) and momentum (23th percentile) tempers our overall conviction. We assign a No Moat rating (21/100), Very High uncertainty, and Poor capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs; balance sheet deleveraging progress; valuation compression risk if growth disappoints. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

WORLD ACCEPTANCE CORP holds a top-quartile position (#0 of 50) within the Finance, Insurance, And Real Estate sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 31.3/100 places it at rank #4431 in our full 7,333-stock universe. At $921M in market capitalization, WORLD ACCEPTANCE CORP is a small-cap player in the Finance, Insurance, And Real Estate space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue is growing at 7%, though momentum at the 23th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.

Available margin data shows operating margins of 3%. Incomplete margin data limits our ability to fully assess the cost structure and margin trajectory, though the available metrics provide a partial view of operating efficiency.

At a current price of $127.77, WORLD ACCEPTANCE CORP is trading at a premium to fundamental value. Our value factor score of 29/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The premium valuation implies the market is pricing in significant future growth or quality improvements that are not yet fully reflected in current fundamentals.

The stock currently trades at a P/E of 54.3x (a 355% premium to the sector median of 11.9x), EV/EBITDA of 86.7x (at a premium), P/B of 1.8x, P/S of 1.2x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis finds only partially justified by current fundamentals.

We assign a Very High uncertainty rating to WORLD ACCEPTANCE CORP. The stock exhibits multiple compounding risk factors: significant leverage (193% debt-to-equity), below-average price stability (18th percentile), weak quality scores (25th percentile). The extreme uncertainty around future cash flows makes precise valuation difficult, and the range of outcomes is exceptionally wide. Only investors with high risk tolerance and extended time horizons should consider this name.

Specific risk factors that inform our assessment include: significant leverage (193% debt-to-equity); below-average price stability (18th percentile); weak quality scores (25th percentile); elevated valuation multiple (P/E 54.3x) that leaves limited margin for error. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 18th percentile and quality factor at the 25th percentile provide a quantitative summary of the overall risk landscape.

We identify limited risk mitigants at this time, which contributes to our very high uncertainty assessment. Investors should monitor for improvement in balance sheet metrics, margin stability, and business predictability that could warrant a downgrade in our risk assessment over time.

We rate WORLD ACCEPTANCE CORP's capital allocation as Poor. Key concerns include low returns on equity (3.4%), elevated leverage (193% D/E), weak asset returns (ROA 1.0%). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — WORLD ACCEPTANCE CORP significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, WORLD ACCEPTANCE CORP receives a Avoid rating with a composite score of 31.3/100 (rank #4431 of 7,333). Our quantitative framework assigns a No Moat (21/100, trend: stable), Very High uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 27/100.

Our analysis does not support a constructive view on WORLD ACCEPTANCE CORP at this time. The combination of limited competitive advantages, very high uncertainty, and poor capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.