The “New Banks” Earnings Finale – Cash America
- Posted by Danny
- on January 26th, 2012
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.
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.
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
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
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