Pawnshop operator First Cash Financial (NASDAQ:FCFS)
remains stuck in a relative lull, caught up in foreign currency
pressure in Mexico and a challenging operating environment in the U.S.
Although margins are holding up better than expected and there are
reasons to believe that both the U.S. and Mexican operations can improve
as the year goes on, it seems unlikely that this company can generate
the sort of headline profit momentum that would get investors interested
in the shares.
As a long-term shareholder of First Cash who has
seen years of ups and downs, I'm inclined to wait it out. Although I do
not expect robust growth in the U.S., I do believe that further
regulatory efforts to curb other types of short-term lending will
benefit the pawn industry and that First Cash is well placed to benefit
from consolidation. I likewise believe that the company still has many
years of double-digit growth in Mexico to look forward to, as well as
potential expansion into new markets. The long-term potential continues
to support a fair value in the high $50s to low $60s, but the company is
likely still facing a few trying quarters.
Read more here:
First Cash Financial - The Battle Between Good Long-Term Potential And Weak Near-Term Momentum
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