It’s been a little while since I’ve covered FirstCash (FCFS), and quite a bit has happened since then, including evidence (at last) of a strong recovery in the U.S. pawn market, a more disappointingly sluggish recovery in Mexico, and a major acquisition (American First Finance, or AFF) and entry into new markets (lease-to-own and other credit products).
To be honest, I’m not at all sold on the AFF deal. I can see the appeal, but I think the capital could have gone to expanding the Latin American pawn operations in countries like Colombia and Peru. That said, it does offer another potential source of growth and cash flow and diversifies the business somewhat (only “somewhat” given similar clientele).
FirstCash shares are down slightly since my last update, and at this point, I believe the shares are priced to generate an attractive long-term double-digit annualized total return. That said, I would think that the Street might need a little time to get comfortable with AFF and, likewise, may want to see signs of a stronger recovery in Mexico before really bidding the shares up again.
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