Seeking Alpha: High Expectations And Uncertain Strategy Could Challenge First Cash Financial

While I'm a happy long-term shareholder of First Cash Financial (FCFS), it is well worth asking what the next year may hold for this generally under-followed and under-known financial services company. Same-store growth has stalled a bit, gold prices are uncertain, and investors continue to look for more definitive guidance about the company's future growth plans. Couple that with a relatively fair valuation, and these shares could appear to some to be liable for some sluggish performance.

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High Expectations And Uncertain Strategy Could Challenge First Cash Financial

Seeking Alpha: Grupo Elektra Copies First Cash Financial Model - Backwards

I found it curious to wake up this morning to news that Mexico's Grupo Elektra (GLEKY.PK), a Mexican retail and financial services conglomerate, was acquiring American payday lender Advance America (AEA) for $780 million in cash. While it represents virtually no threat at all to First Cash Financial (FCFS), it's an interesting twist on the two companies' growth strategies.

A Familiar Story, Told Backwards
First Cash built a solid pawn shop business in the U.S. by catering to consumers who largely operated outside the traditional banking and credit channels (whether by choice or otherwise). The company then found a new leg to its growth by expanding its pawn shop operations to Mexico - a country that is remarkably more "under-banked" than the U.S. Through a combination of torrid new store building and solid same-store sales growth, Mexico has grown to over half of the company's business and more than half of its growth.

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Grupo Elektra Copies First Cash Financial Model - Backwards

Seeking Alpha: Slower Growth May Be A Good Thing For First Cash Financial

It was only a few weeks ago when I wrote that investors ought to consider taking advantage of a pullback in pawn store operator First Cash Financial (NASDAQ: FCFS). Since then, the stock has bounced back to the tune of 15%. Now with fourth quarter earnings in hand, it's a good time to review the thesis and what's going on with this Latin American consumer play.

A Fourth Quarter More Or Less As Expected
First Cash Financial gave analysts revised guidance closely before its official earnings release and so the reported earnings weren't too terribly surprising. Revenue was a little disappointing relative to original expectations, though 15% reported growth and 20% constant currency growth doesn't sound so bad. Unusually for FCFS, revenue growth in the U.S. was stronger than in Mexico. More on this in a minute.

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Slower Growth May Be A Good Thing For First Cash Financial

Seeking Alpha: Another Pullback, Another Opportunity in First Cash Financial

The history of pawn shop operator First Cash Financial (FCFS) has always been marked by pullbacks and retracements, and those have often been good times to reload on what has been an excellent decade-long growth story. Although concerns about the health of the Mexican operating environment and the direction of gold have pulled this stock back from its highs, First Cash remains a high-growth/high-return play with a big international kicker.

A Dose Of Reality To End The Year
Although First Cash had enjoyed a pretty good run for much of 2011, the stock has weakened lately on worries about the health of the company's Mexico operations. Supplying over half of the company's revenue and a lot of the growth, conditions in Mexico have weakened in part due to violence in Northern Mexico, some reduction in loan demand as the economy softens, and lower loan-to-value ratios as the company works to maintain margins and pricing discipline. Making matters a little worse, a weakening peso is a threat to earnings as well.

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Another Pullback, Another Opportunity In First Cash Financial