FirstCash, Inc. – Value Analysis (NYSE:FCFS) : October 23, 2017

Capitalcube gives FirstCash, Inc. a score of 72.

Our analysis is based on comparing FirstCash, Inc. with the following peers – EZCORP, Inc. Class A, Winmark Corporation, Visa Inc. Class A and Input Capital Corp. (EZPW-US, WINA-US, V-US and INPCF-US).

Investment Outlook

FirstCash, Inc. has a fundamental score of 72 and has a relative valuation of UNDERVALUED.

Fundamental Score

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Company Overview

  • Compared to peers, relative underperformance last month is down from a median performance last year.
  • It currently trades at a Price/Book ratio of (1.94).
  • FCFS-US‘s operating performance is relatively good compared to its peers. The market currently does not expect high earnings growth relative to its peers but seems to expect the company to maintain its relatively high rates of return.
  • FCFS-US‘s median net profit margins and relatively high asset efficiency give it some operating leverage.
  • Change in the company’s annual revenues seems to be coming at the expense of earnings.
  • FCFS-US‘s return on assets currently and over the past five years is around the peer median and suggest that it does not have any particular operational advantages versus peers.
  • The company’s margins are around the peer medians and do not suggest any benefit from a pricing or an operating cost advantage versus peers.
  • While FCFS-US‘s revenues in recent years have grown faster than the peer median, the market gives the stock a P/E ratio that is around peer median suggesting that the market has some questions about the company’s long-term strategy.
  • The company is likely overinvesting in a business with only median returns.
  • FCFS-US has the financial and operating capacity to borrow quickly.

Access our research and ratings on FirstCash, Inc.

Leverage & Liquidity

FCFS-US has the financial and operating capacity to borrow quickly.

  • With debt at a relatively low 12.64% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 7.96%), and a well-cushioned interest coverage level of 8.60x, FCFS-US can probably borrow quickly. We classify the company as Quick & Able in terms of its capacity to raise additional debt.
  • All 4 peers for the company have an outstanding debt balance.

FCFS-US has maintained its Quick & Able profile from the recent year-end.

  • FCFS-US‘s interest coverage is upward trending but is still within one standard deviation below its five-year average interest coverage of 28.42x.
  • While its interest coverage increased to 8.60x from 7.30x (in 2016), its peer median decreased during this period to 8.60x from 16.35x.
  • Interest coverage rose 9.05 points relative to peers.
  • FCFS-US‘s debt-EV continues to trend downward and is below (but within one standard deviation of) its five-year average debt-EV of 13.71%.
  • Though its debt-EV decreased to 12.64% from 17.25% (in 2016), its peer median remained relatively stable during this period at 7.96%.
  • Relative to peers, debt-EV fell 4.61 percentage points.

Access the detailed analysis for FirstCash, Inc.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
EZCORP, Inc. Class A 46.2 6.61 2.08 26.73
Winmark Corporation 7.96 2.35 18.26 42.09
Visa Inc. Class A 7.07 1.65 21.25 82.56
Input Capital Corp. 4.47 2.33 -286.72 999
FirstCash, Inc. 12.64 6.85 8.6 51.12
Peer Median 7.96 2.35 8.6 51.12
Best In Class 4.47 6.85 21.25 999

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Company Profile

FirstCash, Inc. engages in service pawn store operation. The company operates through following segments: U.S. pawn operations, U.S. consumer loan operations and Latin America pawn & consumer loan operations. It buys and sells jewelry, consumer electronics, power tools, household appliances, sporting goods, musical instruments and other merchandise, and make small consumer pawn loans secured by pledged personal property. The company was founded on September 2, 2016 and is headquartered in Arlington, TX.

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