Image source: Santander Consumer USA Holdings.
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Shares of Santander Consumer USA Holdings Inc. (NYSE: SC) are on the move, up about 10% as of 1 p.m. EDT on Friday, after the company announced it would restate financial reports for the last three years.
The subprime auto lender has had its fair share of accounting issues. The company disclosed earlier this year that it had weaknesses in internal controls surrounding the way it accretes earnings for dealer discounts, the methods it applied to estimate allowances for loan losses, and the discount rates it used for determining impairments to loans that were accounted for as troubled-debt restructurings.
The jump in the share price today likely reflects the market's surprise that, upon restating its financial results, the company's earnings and shareholder's equity will increase. Santander Consumer USA noted that equity should rise by approximately 1%, while the restatement will result in an increase of $9 million to its first-quarter net income, or approximately $0.02 per share.
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The company hasn't exactly put all of its issues behind it. In the statement, it noted that it expects to "report the existence of additional, previously unreported material weaknesses in internal control over financial reporting."
It plans to file its quarterly report for the second quarter "as soon as possible," but noted that it will complete its amended filings before the deadline for third-quarter filings. At least for today, Wall Street seems quite pleased that earnings and equity will be restated upward, rather than downward.
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