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When I first wrote about EZCORP (NASDAQ:EZPW) in 2008, I envisioned the multiple expanding as it has, but I significantly underestimated the earnings power, which continues to defy expectations. Since I last took a hard look at it in late 2009, it has more than doubled. On Thursday, the company blew away the consensus for Q2 and guided higher for the fiscal year ending in September. More importantly, investors can take comfort in the successful transition in senior ranks in recent quarters, with highly regarded CEO Joe Rotunda succeeded by hand-picked outsider Paul Rothamel (of Pamida and ShopKo) and long-time CFO Tonissen's transition not quite as smooth (with the quick departure of his successor) but now ok, with the arrival of Stephen Stamp.

While we finally exited the position from the Top 20 Model Portfolio earlier this year, which I may regret after trading resumes Monday, subscribers to my private blog, My Own Analyst, were pleased with the report after I had recommended going long for a short-term trade into the number. My target a year out prior to the release was 39, based on 13PE a year from now, but I have increased it with the strong report to 41 (still just 13PE).

Sales of $213mm were 6% ahead of the consensus and strong in the key Pawn segment, driving EPS of .63, which was 10% above the consensus and a stunning 31% ahead of year-ago results. Guidance for the year increased to 2.55 compared with the 2.42 consensus. While there are several moving pieces, one of the key things that stands out is the financial benefit from a transaction announced in March. The company has changed its Canadian expansion strategy as part of a larger and deeper collaboration with its affiliate, Cash Converters, and will be able to open its new locations more inexpensively. The company continues to benefit from rising gold prices and the demand from its clients for scrapping their jewelry. Its new product, the reloadable debit card ChangeCard, sounds exciting, and the company has an aggressive but balanced pawn strategy, opening new stores as well as acquiring a chain. Finally, the EZPW has continued to diversify away from traditional payday lending with alternative products that are less subject to regulatory scrutiny.

The stock traded to about 31 in a quiet pre-holiday after-hours session on Thursday and could trade to 32-33 in the short-term. With a target of 41, it looks like the stock should continue to beat the market over the next year.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: EZCorp Easily Blows Away Consensus