The last year and a half has been especially challenging for FirstCash (FCFS), as this high-quality pawn lender has seen a downturn unlike any other before. While the pandemic drove exceptional demand in its U.S. retail operations, the combination of strict lockdowns in Mexico and heavy government support in the U.S. played havoc with the pawn operations. With second quarter results things still aren’t back to normal, and elevated uncertainties remain, but operating conditions are on a much healthier footing.
Relative to my last update, the shares have not performed particularly well, but then neither have companies with similar customer bases and drivers like Aaron’s (AAN), EZCORP (EZPW), or Western Union (WU); World Acceptance (WRLD) has done notably better, but I don’t follow that one closely enough now to explain that one.
I continue to like the long-term opportunities in front of FirstCash, including high-margin, FCF-generating U.S. stores with further consolidation opportunities and higher-growth stores in Latin America, and I continue to believe these shares can generate a high single-digit to low double-digit annualized return with near-term to around $90 as the business re-accelerates into 2022.
Read the full article here:
FirstCash On A Recovery Trajectory, With Attractive Long-Term Opportunities
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