Financial conglomerate Nelnet (NNI 3.18%) reported better-than-expected first-quarter results, and investors are taking notice. Nelnet shares traded up 10% in the final hour of trading Friday following the strong report.
Strong showing in a challenging economy
Nelnet is a collection of assets including student and consumer lending, payment processing, banking, as well as an investment portfolio with exposure to a number of different sectors. The company earned $1.81 per share in Q1, easily topping Wall Street's $1.37 per-share estimate and an improvement of 23% year over year. Revenue came in at $385.4 million, topping the $364 million consensus estimate.
The company's business of providing services and payments for the education sector was a particular standout, with net income up more than 25% compared to a year ago.
"Our core businesses performed well in an uncertain environment," CEO Jeff Noordhoek said in a statement. "We continue to look for market opportunities to capitalize on our strong liquidity position, including investing in our current businesses, loan acquisitions, strategic acquisitions and investments, and capital management initiatives."
NYSE: NNI
Key Data Points
Is Nelnet a buy after its strong earnings report?
The investment thesis behind Nelnet is that the company has the ability to generate significant amounts of capital from its existing businesses that is then reinvested in areas where management believes they can produce a market-beating return.
Of late, Nelnet is also investing in itself. The stock was roughly flat over the last year heading into earnings season, and Nelnet has repurchased nearly 818,000 shares so far in 2024 at an average price of $92.01 per share, a price Noordhoek says "we believe is extremely attractive."
Nelnet has also grown its dividend per-share payout by 50% over the past five years.
The company's shotgun business model is not for everyone. But for those buying in, the latest results are a good sign that things are working as planned.
