The past six months have been a windfall for FirstCash’s shareholders. The company’s stock price has jumped 45.7%, hitting $230.14 per share. This was partly thanks to its solid quarterly results, and the performance may have investors wondering how to approach the situation.
Is now still a good time to buy FCFS? Or is this a case of a company fueled by heightened investor enthusiasm? Find out in our full research report, it’s free.
Why Does FirstCash Spark Debate?
Offering a financial lifeline to the unbanked and credit-constrained since 1988, FirstCash (NASDAQ: FCFS) operates pawn stores across the U.S. and Latin America while also providing retail point-of-sale payment solutions for credit-constrained consumers.
Two Things to Like:
1. Skyrocketing Revenue Shows Strong Momentum
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years.
Thankfully, FirstCash’s 19.8% annualized revenue growth over the last five years was excellent. Its growth surpassed the average financials company and shows its offerings resonate with customers.
2. Outstanding Long-Term EPS Growth
Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.
FirstCash’s EPS grew at 26.5% compounded annual growth rate over the last five years, higher than its 19.8% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
One Reason to be Careful:
Growing TBVPS Reflects Strong Asset Base
Tangible book value per share (TBVPS) serves as a key indicator of a financial institution’s strength, representing the hard assets available to shareholders after removing intangible assets that could evaporate during economic distress.
Although FirstCash’s TBVPS declined at a 24.2% annual clip over the last five years, the good news is that its growth inflected positive over the past two years as TBVPS grew at an impressive 13.8% annual clip (from $1.10 to $1.43 per share).
Final Judgment
FirstCash’s merits more than compensate for its flaws, and after the recent surge, the stock trades at 21× forward P/E (or $230.14 per share). Is now a good time to buy? See for yourself in our full research report, it’s free.
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