Bloomberg Anywhere Remote Login Bloomberg Terminal Demo Request


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

Bloomberg Customers

Businessweek Archives

A Factor To Be Reckoned With

Inside Wall Street


Beleaguered banks are driving borrowers away--right into the arms of Allstate Financial--no relation to Sears Roebuck's giant insurer. Allstate Financial, whose stock trades over the counter at 13 1/8, has doubled this year. But some savvy investors in small-company stocks think it has a lot more upside potential.

Allstate Financial is a factor--a company that buys another company's accounts receivable at a discount. The seller gets cash without having to wait to collect from a customer. The factor's profit is in the difference between the discounted cost of the receivables and what the factor can collect. Factors have long served companies that have a hard time getting bank loans.

Until recently, factors often lost their best--the most creditworthy--customers as they became bankable. But with the credit crunch, Allstate's customers are sticking around--and it shows. Jerry Levine of Palladin Research Associates figures the company will earn $1.20 a share in 1991--a 19% gain over 1990--and should post another 15%-to-20% gain in 1992.

Levine's estimate doesn't count Allstate's new unit, Lifetime Options, which buys the life-insurance policies of the terminally ill at a discount. "It's new, so we're taking it slow," says Lawrence Winkler, Allstate's secretary-treasurer. Still, he says Lifetime should provide "some earnings impact" in 1992. Money manager Donald Herman of William D. Witter estimates that every $20 million in policies Lifetime buys should yield $1 a share in profit. With that earnings potential, plus the factoring profits, it shouldn't be long before the stock doubles again.JEFFREY M. LADERMAN

blog comments powered by Disqus