The “New Banks” Earnings Season Rolls on with First Cash Financial

• Posted by Danny
• on January 25th, 2012

First Cash rides the “pawn star” economy to a record year…and expects an even better 2012.

 

 

On the heels of EZCorp‘s ($EZPW) weaker than expected report last week, First Cash ($FCFS) picked up the slack a bit for our pawn brokers as they edged out EPS estimates this morning by a penny. They came in a couple cents below our own Estimize target of 72 cents though…but who’s counting!

Here’s the latest Q4 YoY numbers:

• Revenue +15%
• Net income +21%
• Diluted EPS +25%
• Merchandise sales +21%
• Pawn loan fees +6%

FCFS also scooped up a chain of 29 pawn shops south of the border, and guided 2012 earnings to top 2011 by 18-20%.

Full year 2011 stats:

• Revenue +23%
• Net income +38%
• Diluted EPS +36%
• EBITDA +31%
• SSS +13%
• Scrap jewelry +33% (buy gold!)

Operating profit margins hit a record level of 30% for 2011, and return on equity rose to 22%.

The CEO had this to say about the state of the “pawn shop” economy many of us now live in:

“The fundamental demand for micro credit products for credit-constrained consumers remains strong, as does the demand for buying and selling value-priced electronics, tools and jewelry….Year-over-year growth in pawn revenue and receivables remained especially strong in the U.S., and we remain very positive on the long-term product demand and our ability to command market share in the U.S. and Mexico.”

 

 

Ranked 22nd in the BeanScreen this month, we started a position in FCFS recently at $35. While the rocketship growth of a year or so ago may be waning a tad, pawn shops/payday lenders have been adapting to the new economy, setting themselves up for future prosperity by appealing to more mainstream consumers.

The stigma of walking into a pawn shop isn’t what it used to be. Just look at the beautiful shop in the pic above. If I couldn’t read, I’d say it was some hip new coffee house.

Rounding out the earnings season for our trio of pawnies, Cash America ($CSH) reports tomorrow.

 

sources:  First Cash Reports Fiscal 2011 Earnings of $2.25 per Share; Net Income Increases 38% Over Prior Year – Y! Finance

First Cash Q4 beats estimates, sees strong 2012 – Reuters

First Cash 4Q net income up on merchandise sales – Y! Finance (AP)

FirstCash.com

disclosure:  we currently own shares in FCFS, EZPW and CSH

 

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