With traditional credit remaining tight, the pawn shop operators are filling the void. Cash America International Inc. (CSH) recently raised fiscal 2011 earnings guidance after it surprised on the second quarter Zacks Consensus Estimate. This Zacks #1 Rank (strong buy) is also an attractive value stock, with a forward P/E of 12.7.
Cash America provides financial services at 782 locations in 23 states under the names Cash America Pawn, SuperPawn, Maxit, Pawn X-Change, Cash America Payday Advance and Cashland.
It is also a majority owner in 184 pawn shops in 21 jurisdictions in central and southern Mexico under the name Prenda Facil.
Additionally, the company offers consumer loans over the Internet in 30 states, the United Kingdom, Canada and Australia.
Cash America Beat By 14.1% in the Second Quarter
On July 21, Cash America reported its second quarter results and surprised on the Zacks Consensus by 11 cents. Earnings per share were 89 cents compared to the estimate of 79 cents. The company made just 70 cents in the year ago period.
Revenue rose 14% to $334.3 million from $292.1 million in the second quarter of 2010 due to a 15% increase in pawn loan fees and service charges and a 14% increase in merchandise sales.
Merchandise sales saw higher gross profit margins, which led to an 18% increase in profit from the disposition of merchandise.
Consumer loan fees rose 14% to $132.4 million compared to the prior quarter. The company saw lower losses on consumer loans in the quarter.
Raised Guidance
Given the better-than-expected quarter, and the higher than originally expected balances of lending assets, Cash America raised its full year earnings guidance to a range of $4.28 to $4.48 per share from its April guidance of $4.16 to $4.30.
2011 Zacks Consensus Estimates Rise
Since the earnings report, 7 estimates for fiscal 2011 moved higher pushing the Zacks Consensus up to $4.41 from $4.26 per share.
This is earnings growth of 15.1%.
Shares Near Multi-Year High
Move over Apple. Cash America shares have been hot, recently hitting a 5-year high.
But even with the hot share price, there is still value.
In addition to a P/E under 15, which is the traditional cut-off I use for value, Cash America also has a price-to-book ratio of 1.9. A P/B ratio under 3.0 usually indicates value.
Shareholders are also rewarded with a small dividend, currently yielding 0.3%.
Cash America is a value stock that also provides double digit earnings growth.
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her at twitter.com/traceyryniec.
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