The “New Banks” Earnings Finale – Cash America
The last in our magnificent trio of pawn shops misses Q4 EPS, but still reports a banner year.
Kinda like EZCorp ($EZPW), who reported Q1 last week, Cash America ($CSH) found the Yuletide to be a bit softer than anticipated. Holiday promos ate into profits as CSH lured customers into its shops. Nevertheless, CSH had a strong Q4 and a record year in 2011.
Yesterday First Cash ($FCFS) rocked the shop with its Q4 and full year.
Here’s the lowdown for CSH’s Q4 YoY:
- Revenue +26%
- Net income +9%
- Merchandise sales +24%
- Loan fees +37%
- Expenses +20%
The CEO spoke to the weaker than expected EPS result:
“The increase in our consumer loan portfolio generated a significant increase in revenue, although an attributable increase in expenses for marketing and loss reserves reduced a portion of the near term contribution to earnings…The holiday selling season achieved the sales objectives we expected but with a greater level of pricing discounts than anticipated…”
And the full year results:
- Revenue +19%
- Net income +18%
Looking ahead, CSH wasn’t able to give next quarter or full year 2012 guidance due to its recently proposed IPO of Enova common.
So not a bad earnings season for our New Banks. On the whole it seems expectations were a bit loftier than the pawnies could deliver, especially on the EPS front. We’re not gonna complain though as all three still managed to post stout numbers. The industry as a whole may be ready to take a breather as growth has been fantastic over the last few years.
Ranked #38 in the BeanScreen, we’ve owned CSH for about a year and a half now at a cost basis of $38. We added to our position recently at $40.50.
We will continue to hold all three pawnies for the foreseeable future.
On a side note, an old BeanScreen fave, World Acceptance ($WRLD), reported yesterday. They missed estimates as costs related to bad loans and expenses hurt profits. While still fundamentally sound, we decided to cash out a few months ago because, unlike our three pawn brokers, WRLD is strictly a payday/online loan lender. If you’re going to invest in the consumer finance industry, we recommend buying companies that have a more diversified business model.
sources: Cash America Announces Fourth Quarter and Fiscal Year-End Earnings and Declares Dividend – Y! Finance
Cash America Q4 profit misses Street on higher costs – Reuters
disclosure: we currently own CSH, FCFS and EZPW
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Daniel Miller and Jason Robinson are self taught investors based in Daphne, Alabama, and are the co-founders of the WallStreetBean. Neither one of them are professional investors - just two regular guys who want to share their investing ideas and thoughts with others. More
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Recent Posts
- The “New Banks” Earnings Finale – Cash America
- The “New Banks” Earnings Season Rolls on with First Cash Financial
- RPC’s Frickin’ Frackin’ Earnings
- The Mother of All Analogs
- Wintel Reports, the Crowd Goes Wild
- EZCorp Shanks Estimates, but the Pawn Shop Expands in Q1
- Fundamentals of NetEase.com
- Garmin’s New Prototype Cockpit Setup
- BeanScreen LinkHouse – Week in Review (January 9-14, 2012)
- BeanScreen LinkHouse – Week in Review (January 2-6, 2012)
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