Wednesday, January 28, 2015

Seeking Alpha: Multiple Headwinds Sapping First Cash Financial's Momentum

This was not the start to 2015 that I was hoping for from First Cash Financial (NASDAQ:FCFS). Although foreign currency moves are out of the company's control and same-store sales continue to improve in both the U.S. and Mexico, I don't expect the market to be at all pleased with the probability that reported revenue growth will stall in 2015 and that reported earnings per share will decline.

The outlook is not so bleak on a long-term free cash flow basis and First Cash still has multiple avenues of profitable growth to pursue. A roll-up strategy in the U.S. can still generate good margins and cash flow while the Mexican stores remain an underpenetrated play on Mexican consumers. Last and not least is the eventual/possible expansion into additional Latin American markets.

Double-digit EBTIDA growth could mollify investors, but I'm expecting 2015 to be a more challenging year for First Cash. Given that the stock is not hugely undervalued, I would say it looks more like a hold than a buy today.

Continue here for the full article:
Multiple Headwinds Sapping First Cash Financial's Momentum

No comments: