The Hedgeye Financials Team, led by Sector Head Josh Steiner, will be hosting a conference call tomorrow (at 1pm ET) to run through their outlook on Credit Card lenders.
Credit Card lenders are notoriously cyclical stocks that should be avoided/shorted late in the cycle. The cycle is late.
Credit is deteriorating. Rapid loan growth is obfuscating underlying performance, and seasonality headwinds will combine with cyclical pressures to make both the intermediate term and longer-term outlook very challenging for the group.
Capital One (COF), Discover (DFS) and American Express (AXP) all have underappreciated risks.
KEY DISCUSSION POINTS:
- Delinquencies are rising quickly across the group.
- Roll rates are deteriorating.
- Bankruptcy tailwinds are reversing.
- Subprime and deep subprime exposures have grown significantly, creating more downside risk than people realize.
Attendance on this call is limited. Please note if you are not a current subscriber to our Financials research there will be a fee associated with this research call and related material. Ping firstname.lastname@example.org for more information.