FirstCash Likely Past The Worst, And The Long-Term Growth Potential Comes Back Into Focus

 

Pawn shop operator FirstCash (FCFS) is still in for a few more rocky quarters, but recent data from the company do support the idea that pawn loan demand is bottoming out. It’s going to take time to rebuild retail inventories and pawn loan balances, but the arrow is pointing up and I expect the story to once again shift toward the long-term growth opportunities ahead of the company in Latin America.

As is often the case, the share price has moved ahead of the actual improvements in reported numbers. Up about a third from my last update, I can’t say that the Street is ignoring or avoiding this name now. Still, assuming the company can get back on a trajectory to mid-single-digit growth (relative to pre-pandemic norms), the shares do still offer solid upside on the basis of improving cash flow generation in the U.S. operations funding more dividends and buybacks and a long growth runway in Latin America outside of Mexico.

 

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FirstCash Likely Past The Worst, And The Long-Term Growth Potential Comes Back Into Focus