PCG Presentation for the Elevate Pawn Symposium
EzCorp Pawn Shops Taking Over For Traditional Lenders
With unemployment still high and consumers struggling for cash, the pawn shop operators have stepped into the void left by traditional lenders. EzCorp ( Snapshot Report) is trading at just 12.5x forward estimates even as shares hit new 5-year highs.
This Zacks #2 Rank (buy) operates pawn shops where it provides loans and credit services to customers who have short-term cash needs.
EZPW offers non-recourse loans collateralized by personal property in its stores, known as pawn loans. It also offers payday loans, installment loans and auto title loans. EzCorp operates 1,000 stores in North America, including 500 pawn stores in the U.S. and Mexico and 500 short-term consumer loan stores in the U.S. and Canada.
Partnering With Rev Worldwide
On March 10, EZPW announced it was partnering with Rev Worldwide, which develops prepaid debit card and mobile payment programs, to bring new products to its customers.
“We want to be less centered on the short-term cash needs of the cash and credit constrained customer and more focused on serving a variety of financial needs for a broader range of consumers,” said Mark Kuchenrither, EzCorp’s senior vice president of strategic development.
EzCorp is testing several products that it hopes to launch in stores later in the year.
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Shares Soar to New 5-Year Highs
After the news of the partnership with Rev Worldwide, shares have broken out to the upside. You can see the recent breakout in the 6-month chart.
Still a Value Stock
Despite soaring, shares still have value. In addition to a low P/E ratio, EZPW has a price-to-book of 2.5, which is under the 3.0 value cut-off. It also has a stellar 1-year return on equity (ROE) of 20.8%.
Revenue Jumped 18% in the Fiscal First Quarter
On January 20, EzCorp reported its fiscal first quarter results and beat on the Zacks Consensus Estimate by 11.3%. Earnings per share were 69 cents compared with the consensus of 62 cents. It was the third earnings surprise in the last four quarters.
Revenue climbed to $218.8 million with same store revenue rising 13%. EZPW opened 29 new stores in Mexico, Canada and states outside of Texas.
In a continuation of its strategy to diversify its product offerings, U.S. payday lending represented only 16% of total revenue in the quarter, down from 20% in the year ago quarter.
EZCORP is expected to report fiscal second quarter results on April 21.
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