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On Friday, Canaccord Genuity analyst Brian McNamara increased the price target for EZCORP (NASDAQ:EZPW) to $22.00, up from the previous $19.00, while sustaining a Buy rating on the stock. McNamara’s decision follows EZCORP’s announcement of another record quarter after the market closed on Thursday, with a 7% increase in Q4 sales, slightly ahead of Canaccord Genuity’s estimate and just below consensus. The company’s pawn loans outstanding (PLO) saw a significant 13% rise to $274.8 million. According to InvestingPro data, EZCORP maintains strong financial health with a "GREAT" overall score of 3.18, supported by revenue growth of nearly 9% over the last twelve months.
EZCORP’s merchandise sales grew by 4%, but the merchandise margin fell marginally short of the targeted 35% to 38% range, coming in at 34.6%. This was attributed to increased promotional activities and customer negotiations at store level, as loan growth outpaced merchandise sales. Despite this, adjusted earnings per share (EPS) and EBITDA exceeded expectations by 13% and 14%, respectively, driven by a favorable product mix and disciplined expense management. InvestingPro analysis shows the company is currently trading at an attractive P/E ratio of 10.7, with strong liquidity evidenced by a current ratio of 2.91.
The company’s loyalty program, EZ+, continued to show strong performance with a 38% year-over-year increase in recruitment and a 7% sequential rise, alongside improved member engagement. EZCORP’s pending acquisition of Auto Dinero, announced in September, is still under review, but McNamara expressed confidence that it will add scale and diversify the company’s offerings into higher-value collateral.
Management has reiterated their commitment to addressing the 2025 convertible notes maturing in May, exploring all options including retirement or refinancing, backed by the company’s consistent operational improvements. McNamara believes that the market would respond favorably to a traditional refinancing or cash settlement of the convertible debt, potentially leading to a higher valuation multiple. InvestingPro subscribers have access to additional insights, including 6 more ProTips and a comprehensive Pro Research Report, which provides deep-dive analysis of EZCORP’s financial position and growth prospects among 1,400+ top US stocks.
The analyst also noted that the demand for pawnbroking services is on the rise due to persistent inflation and limited credit access for many consumers. Moreover, there is an increasing consumer trend towards affordable, sustainable pre-owned goods. In light of these factors and the company’s strong performance, Canaccord Genuity has raised its estimates and reiterated the Buy rating, with a new price target of $22. Based on InvestingPro’s Fair Value analysis, EZCORP appears to be undervalued at current market prices, with two analysts recently revising their earnings expectations upward for the upcoming period.
In other recent news, EZCORP Inc. has been making significant strides in its operations and leadership. The retail and financial services company reported record-breaking results for its fiscal fourth quarter and full year 2024, with an 11% year-over-year increase in total Q4 revenue to $300.9 million and a 14% growth in pawn loan originations to $279.2 million. The company’s strategic initiatives and expansion efforts, including the addition of 21 new stores and a 44% surge in EZ+ Rewards program membership, have led to a substantial increase in profitability.
In a recent executive move, EZCORP appointed Michael Croney as its new Chief Accounting Officer. Croney, a seasoned professional with extensive experience in senior accounting and financial positions, will be assuming his new role effective February 10, 2025. This appointment is part of EZCORP’s ongoing commitment to strengthening its leadership team and ensuring robust financial management and reporting practices.
Looking ahead, the company plans to open 40 new stores in Latin America in 2024, with a focus on Mexico, and expects to return to normal seasonality in loan demand by 2025. These recent developments underscore EZCORP’s focus on growth and operational excellence, as well as its commitment to enhancing pawn operations and customer relationships.
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