American Finance System, Inc., a major consumer finance company, yesterday reported a sharp recovery during 1976.

Earnings for the Silver Spring firm totaled $2.82 million (46 cents a share) compared with a loss in 1975 of $14.8 million, according to preliminary data.

Included in the 1976 profits was an extraordinary gain of $263,000 (6 cents a share), resulting from an operating loss carryforward that reduces taxes.

In the final quarter of the year AFS earned $944,000 (17 cents) compared with a year-earlier loss of $13.8 million. After closing unprofitable offices in several states over recent years, AFS now has more than 400 consumer loan offices in 24 states and Ontario Province of Canada.

Washington Homes, Inc., a homebuilder based in Oxon Hill, reported higher sales and profits for the quarter and six months ended jan. 31, reflecting a general upswing in residential construction.

Earnings rose to $851,992 (66 cents) on sales of $17.6 million in six month period compared with profits of $593,640 (45 cents) vs. $201,859 (15 cents) as sales rose to $6.8 milliFor the quarter, Washington Homes earned $261,473 (20 cents) vs. $201,859 (15 cents) as sales rose to $6.8 million from $5 million.

Continental Telephone Corp., the nation's third-largest independent telephone firm and the No. 2 telephone utility in Virginia, reported record sales and profits during 1976.

Net income was $65.3 million ($1.57 a share) compared with $50.6 million ($1.23) in 1975 as revenues rose to $648.5 million from $559.2 million. Continental said the substantial gains reflect improvements in long-distance volume and profitability, local rate increases and lower interest rates.

During 1976, Continental recieved rate increases of $19 million of an annual basis and had 2.4 million telephones in service, an increase of 5.2 per cent. The telephone firm spent $205 million on expansion and capital improvements last year and expects to add another $240 million in 1977.

President James V. Napier said his firm expects to recieve a $320 million contract to build telephone cables facilities in Iran. The contract would involve four or five years of work and 30 per cent of the total funding would go to Continental, he added.

Heck's Inc., a Charleston, W. Va., retailer, reported profits for 1976 of $7.2 million ($1.17 a share) compared with $5.4 million (87 cents) in 1975. Sales rose to $183.6 million from $151.1 million.

Capital Film Laboratories, Inc., of Washington, reported a decline in profits of 15 per cent for the nine months ended Dec. 31. Earnings were $167.131 (32.5 cents a share) vs. $196,970 (38.3 cents) in the prior year. Revenues were flat at $5.97 million.

President Peter Boyko said the decline in profits was due to higher costs at a New York laboratory. He said negotiations are continuing on a possible sale of Capital's assets to a new group headed by Ralph S. Torello, as reported previously. Directors also approved a dividend of 3 cents a share, payable Feb. 28 to stockholders of record Feb. 17.