EZCORP's EPS Misses, Revenues Grow - Analyst Blog
January 24 2012 - 4:15AM
Zacks
Austin, Texas-based EZCORP
Inc (EZPW) recently reported first quarter 2012 earnings
of 78 cents per share, below the Zacks Consensus Estimate of 81
cents, but up 13.0% from the year-ago adjusted earnings of 69
cents. The lower-than-expected results were due to weak U.S holiday
sales, drop in gold prices and unfavorable currency impact.
Total revenue in the quarter jumped
14% year over year to $248.9 million, backed by growth in the US
pawn and Empeno Facil business.
Quarter
Performance
Segment wise, U.S. pawn operations
sales rose 15.0% to $184.5 million, driven by a 2% rise in comps
and higher Empeno Facil sales (up 56% to $19.4 million) benefiting
from 15% same-store sales growth. However, EZMONEY operations
revenue fell 1% to $45.0 million, due to a 2% drop in comps.
Store operating income rose 14%
with margin enhancing to 52%. Though operating expense of the
company increased 15.5% to $74.5 million, operating income was
impressive at $54.8 million, up 9% on adjusted basis.
Expansion
Update
The second largest operator of pawn
stores in the United States continued to expand in the US Pawn
segment and EZCORP acquired 24 units during the quarter.
The company also expanded its
Empeño Fácil segment by adding 14 new stores. The company currently
operates more than 1140 stores worldwide, with 463 pawn stores, 192
Empeño Fácil units and 487 EZMONEY units.
In April, EZCORP acquired Cash
Converters franchise rights in Canada and currently 24 out of the
65 company-owned stores are successfully operating under the Cash
Converters brand.
EZCORP also plans to acquire a 60%
stake of Mexico City-based short-term payroll deduction loan
company Crediamigo for $58.7 million. The transaction is expected
to close in second quarter of 2012.
Financial
Position
The company ended the quarter with
cash and cash equivalent of $22.9 million, down from $24.0 million
in the fiscal year 2011. At the end of the first quarter, long-term
debt, less current maturities, was $40.5 million and stockholders'
equity was $698.4 million.
Outlook
EZCORP reaffirmed its 2012 earnings
per share guidance range of $3.05 to $3.10, up 20% from the 2011
adjusted earnings of $2.57 per share.
Our Take
The company’s first quarter results
were below expectations, but it continues to focus on cost control,
new store growth, expansion and initiatives to improve services and
drive traffic. Hence, we expect estimates to move up in the coming
days. The Zacks Consensus Estimates for 2012 and 2013 are pegged at
$3.07 and $3.50, respectively.
The company has a Zacks #4 Rank,
which translates into a short-term Sell rating. We also reiterate
our long-term Neutral recommendation on the stock.
One of EZCORP’s primary
competitors, First Cash Financial Services Inc.
(FCFS) is slated to release its fourth quarter 2011 results on
January 25, 2012.
EZCORP INC CL A (EZPW): Free Stock Analysis Report
FIRST CASH FINL (FCFS): Free Stock Analysis Report
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