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Investing.com - Texas Capital Securities initiated coverage on First Cash Financial (NASDAQ:FCFS) with a Buy rating and a price target of $160.00 on Tuesday. The stock, currently trading at $133.28, has shown strong momentum with a 9.32% gain over the past week and is trading near its 52-week high of $138.42. According to InvestingPro analysis, the company maintains a "GREAT" financial health score of 3.06 out of 4.
The firm cited First Cash’s position as the largest operator of pawn stores in the U.S. and Latin America, with over 3,000 retail locations and a growing consumer finance platform. First Cash provides non-recourse, small-dollar, collateral-based loans secured by personal assets like jewelry, electronics, and tools. The company’s strong market position is reflected in its robust financial metrics, with annual revenue of $3.39 billion and a healthy gross profit margin of 60.36%.
Texas Capital highlighted that First Cash is "structurally positioned to outperform in a worsening macro backdrop" as inflation pressures persist, consumer delinquencies rise, and traditional credit tightens. The firm noted that historically, pawn loan demand and same-store sales increase during periods of economic stress.
The research firm emphasized First Cash’s cash generation capabilities, with approximately $500 million in annual operating cash flow, minimal capital expenditure requirements, and a capital-light store expansion model. Management’s disciplined M&A track record and focus on capital returns through dividends and share repurchases were also noted as positives.
Texas Capital’s $160 price target is based on a 12x FY26E EBITDA multiple, describing First Cash as "a rare countercyclical compounder with structural demand tailwinds, proven management, solid business model and high returns on capital."
In other recent news, FirstCash Holdings, Inc. reported second-quarter adjusted earnings that surpassed analyst expectations, driven by strong demand for pawn loans and enhanced performance in its retail point-of-sale payment solutions segment. The company posted adjusted earnings of $1.79 per share, exceeding the analyst estimate of $1.67. Revenue reached $830.6 million, surpassing the consensus estimate of $822.6 million. Same-store pawn receivables rose by 13% in both the U.S. and Latin America, indicating solid consumer demand for pawn loans. Additionally, FirstCash announced an 11% increase in its dividend. These recent developments highlight the company’s financial strength and operational success.
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