FirstCash In A Lull, But This Should Be A Pause That Refreshes

Third quarter results from FirstCash (FCFS) were okay, but don’t suggest a particularly powerful surge or shift in operating performance anytime soon. That’s okay though, as I believe management is making several modest “course corrections” that will keep the company on a trajectory for healthy long-term growth. The U.S. operations remain a good source of cash flow with further improvement potential in the Cash America store base, while Mexico and Latin America continue to offer a long-term runway of exceptional growth potential with relatively few major competitive threats.

Valuation is still a mixed bag. I think my long-term estimate of mid-single-digit revenue growth (and low double-digit FCF growth) could have some upside, but I don’t want to make the mistake of overstating/overestimating the growth potential of Latin America as the Mexican business and matures, nor the impact of the slower-growing U.S. business. Still, with a total potential annualized return of around 10%, this isn’t a bad buy-and-hold idea.

Read more here:
FirstCash In A Lull, But This Should Be A Pause That Refreshes