Arlington, Texas-based First Cash Financial Services Inc (FCFS) increased its 2011 earnings guidance to between $2.12 and $2.20 from the previous range of $2.02 to $2.10, reflecting year-over-year growth of 28% to 33%.
The pawn and payday lender boosted its outlook on better-than-expected quarter-to-date results driven by strength across all its operating markets and sectors and improving economic trends for the remaining year. Additionally, the company also acquired six pawn stores located in Indiana and Missouri in February 2011, which will further drive profit than previously expected.
The company also recently inked a deal to sell its 10 payday lending stores located in Illinois for approximately $19.7 million to focus on its core business of pawns. The transaction is expected to close by the end of March 2011. First Cash plans to use the proceeds from the sale to buy back shares. The company currently has $1.4 million shares remaining under its existing repurchase authorization.
The previous earnings outlook of 2011 included income of 5 cents per share from the Illinois stores. However, excluding the contribution of Illinois payday lending stores, First Cash hiked its earnings forecast by 15 cents.
In the first quarter of 2011, First Cash expects earnings from continuing operations between 47 cents and 49 cents, up 42% to 48% from the prior-year quarter.
The Zacks Consensus Estimate for the first quarter of 2011 and for fiscal 2011 is 48 cents and $2.18, respectively.
We have a Zacks #2 Rank on the stock, implying a short-term Buy rating. We also reaffirm our long-term Neutral recommendation on the stock.
The company’s primary competitors are EZCORP Inc (EZPW) and Cash America International Inc (CSH).
CASH AM INTL (CSH): Free Stock Analysis Report
EZCORP INC CL A (EZPW): Free Stock Analysis Report
FIRST CASH FINL (FCFS): Free Stock Analysis Report
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