GWG Holdings, Inc. :GWGH-US: Earnings Analysis: Q1, 2017 By the Numbers : June 6, 2017

GWG Holdings, Inc. reports financial results for the quarter ended March 31, 2017.

We analyze the earnings along side the following peers of GWG Holdings, Inc. – MetLife, Inc. and Lincoln National Corporation (MET-US and LNC-US) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 20.09 million, Net Earnings of USD -0.05 million.
  • Year-on-year change in operating cash flow of 41.89% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings decline from operating margin decreases as well as from unusual items

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income (See complete table at the end of this report):

2017-03-31 2016-12-31 2016-09-30 2016-06-30 2016-03-31
Relevant Numbers (Quarterly)
Revenues (mil) 20.09 16.87 13.92 20.78 17.9
Revenue Growth (%YOY) 12.2 183.51 68.06 142.61 6.36
Earnings (mil) -0.05 -3.1 -3 1.88 1.07
Earnings Growth (%YOY) -104.2 34.98 17.45 183.6 -67.06
Net Margin (%) -0.22 -18.39 -21.53 9.05 6
EPS -0.32 -0.44 -0.43 0.29 0.18
Return on Equity (%) -9.73 -18.59 -26.86 38.11 33.06
Return on Assets (%) -0.03 -2.1 -2.39 1.64 1.02

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Market Share Versus Profits

Revenues History
Earnings History

GWGH-US‘s change in revenue this period compared to the same period last year of 12.20% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that GWGH-US is holding onto its market share. Also, for comparison purposes, revenues changed by 19.04% and earnings by 98.55% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings

GWGH-US‘s change in operating cash flow of 41.89% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Margins

The company’s fall in earnings have been influenced by the following factors: (1) Contraction in operating margins after interest from 66.02% to 65.70% and (2) One-time items that contributed to a weakening of pretax margins from 12.06% to -0.23%.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for GWG Holdings, Inc.

Company Profile

GWG Holdings, Inc. operates as a financial services company. It engages in the creation of life insurance secondary market for the economic benefit of seniors with life insurance who are seeking post-retirement financial solutions, investors seeking yield derived from non-correlated assets, financial advisors seeking value-added products and services for their clients, and shareholders seeking to gain from the realization of the marketplace. The company was founded by Jon R. Sabes, Paul A. Siegert, and Steven F. Sabes in February 2006 and is headquartered in Minneapolis, MN.

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