Beset by short sellers and reeling from what they would term an overreaction to a profit warning last month, officials of Associates First Capital are lobbying investors for better treatment.

In an analyst conference call this week, the Irving, Tex.-based consumer finance company made the case that its stock is undervalued, saying it is "on track" to meet earnings targets for 2000.

This word of confidence came after the company announced last month that its first-quarter earnings would miss consensus estimates by about 9%.

Its shares, which were off 62% from their peak last April, gained 50 cents, to $18.4375, in trading Tuesday. But they were still worth only about eight times projected 2000 earnings, despite analyst estimates of 13% to 16% earnings growth for the year.

"We are the same company that was trading at $45," said Roy A. Guthrie, senior executive vice president and chief financial officer at Associates. "We have the same outlook on a bright future, the same philosophical underpinnings, and the same culture."

Essential to the company's growth this year will be maintaining stable margins, improving credit quality, and controlling expenses, the company said. Part of the problem is worry among investors of when the next shoe will drop. Investors fear credit quality will be the next unpleasant surprise from Associates.

The consumer finance company's credit losses in 1999 increased to 2.8% of average managed receivables, from 2.43% in 1998. Most sections of Associates' portfolio had increases in chargeoffs in the fourth quarter from a year earlier.

Net credit losses in its home equity portfolio - its largest sector, comprising of one-third of its loans - increased to 1.49% of receivables in the fourth quarter, from 1.19% in the same period in 1998. The rapid growth of its home equity loan portfolio, up 21% in 1999, masks the dollar amount increases of chargeoffs within the portfolio, said Joel Houck, an analyst with A.G. Edwards & Sons Inc. The chance of that catching up with the Associates has some investors spooked.

"You have to factor in the strong growth of home equity in the past year," Mr. Houck said. "Sooner or later your loan losses will" shave earnings.

Mr. Guthrie said the company has tightened credit controls on its real estate products. It also moved to centralize its home equity receivables into three service and collections centers. That will help the company decrease in loan losses for 2000, he predicted.

Also raising concerns among investors is Associates' controversial use of gain-on-sale accounting. In the fourth quarter, the company recorded a $68 million gain, using an accounting technique that allows a company to count future gains from expected sale of loans on the secondary market.

What alarmed some analysts is that without the gain, Associates would have missed its fourth-quarter earnings targets. It also marks a departure from the past, Mr. Houck said; the company used to pride itself on not counting those gains on the bottom line.

"We are as conservative as we can be" with the accounting rules, Mr. Guthrie said.

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