FirstCash Doing Pretty Well Through A Challenging Period

There was no reason to expect FirstCash’s (FCFS) fourth quarter to be strong, as management had warned investors about the impacts of curtailing the consumer lending business (payday lending) and social programs in Mexico that were impacting pawn loan demand. While I wouldn’t call the results “strong”, I think they do demonstrate that FirstCash management is able to effectively manage the company through both the boom times and the challenging times, neither of which last forever.

FirstCash shares have recovered from their lows but still appear to offer double-digit upside on a long-term discounted cash flow basis. The U.S. operations will be a cash cow, generating cash for dividends and buybacks, while the company continues to reinvest the cash flow generated by the Latin American operations into further store growth across the region. All told, while this is a stock with above-average risk, I think it’s a name worth considering.

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FirstCash Doing Pretty Well Through A Challenging Period