Analyst Michael Hughes says the road to recovery continues. He says fundamentals and the balance sheet continue to strengthen as charge-offs, lending margin, opertating expenses, and risk-based capital all improved. He notes risk based capital ratios for Providian's banks ahead of the capital plan schedule at 11.88% (applying sub-prime guidance) vs. 10% is required by June 2003. He thinks Providian is inexpensive on a price-to-book and price-to-earnings basis.
Hughes says the company is in turnaround mode, but believes core fundamentals are improving, and that the company is attractive for investors who can take above-average risk. He sees $0.62 2002 earnings per share and $0.50 for 2003.