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FirstCash Breaks 52-Week High Despite Downgrade

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FirstCash Inc. (FCFS) stock was downgraded a week ago by Zacks Investment Research. The company, operating in El Salvador, Mexico, Guatemala and the U.S., maintains over 1,250 pawn stores. The pawn shops offer cash-strapped customers quick cash options for their goods.

The company also runs a financial services division which offers payday loans among other high-interest financial instruments to consumers.

Zacks downgraded FCFS from a buy rating to a hold rating.

The hold rating was due to the company's stock hitting near 52-week high levels. On Tuesday, FirstCash hit a 52-week high of $60.80, which was nearly surpassed on Wednesday. The company's stock is $60.75 per share, up 0.16% on the day. Investors believe the company's stock will hit resistance at $61 - $62 a share.

Investors are also cautious of possible CFPB changes impacting the company under the Trump Administration. "It is widely understood that the recent executive orders passed by the Donald Trump administration, lays the groundwork for significant changes to the current law and may even lead to replacement of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010," states Real PDL Help.

Trump has proposed a roll back on regulations in the past for payday loan companies. A rollback would remove many of the fees and scrutiny that First Cash and similar companies face. Loosening restrictions would allow FirstCash to increase their payday loan offerings and increase revenue significantly. The loosening would be beneficial for the company, helping push the stock past resistance levels.

FirstCash stock is up 29% in the past year and 9.36% in the past 90-day period.

The company's latest earning release was largely positive. It topped earnings per share estimates of $0.47 by $0.05, totaling $0.52 on the quarter. Net margins hit 3.66%, while revenue surpassed expectations by nearly $5 million. The company's revenue on the quarter hit $416.60 million.

Revenue rose 128.9% year-over-year.

Net earnings on the quarter were $15.24 million, lower than the previous quarter when the company posted $32.65 million in net earnings on $447.58 million in revenue. Net margins also fell by nearly half from quarter-to-quarter from 7.29% in the first quarter to 3.66% in the second quarter.

EPS also fell quarter-to-quarter from $0.67 to $0.52. The company's return on assets came in at 2.94%, down from 6.18% during the same quarter a year prior.

Analysts have the company posting full-0year earnings per share of $2.66. Investors also received a $0.19 dividend on August 15.


This article was written by Adam Monson for on .

This article published in collaboration with Scutify, the best app for traders and investors. Download the Scutify iOS App, the Scutify Android App or visit Scutify.com.

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