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COCONUT CREEK, Fla. - In a direct appeal to EZCORP’s (NASDAQ:EZPW) board and management, Kanen Wealth Management, LLC, which owns over 1.5% of the company’s shares, has called for an immediate initiation of a $100 million share repurchase program. The proposal comes at a time when EZCORP, currently valued at $741 million market cap, maintains strong financial health according to InvestingPro analysis, with liquid assets significantly exceeding short-term obligations. This move comes as a response to what the investment firm sees as a significant misstep in EZCORP’s capital allocation.
Kanen Wealth Management criticized EZCORP’s decision in Q4 2024 to settle convertible notes entirely in equity, leading to an "unexpected and avoidable dilution" of shares. The firm contends that this decision contradicted the company’s initial intention to settle the notes in cash, supported by a $300 million capital raise. The investment firm argues that the stock’s subsequent rise in price could have been leveraged more effectively.
The firm had previously recommended in December 2022 that EZCORP embark on a $200 million stock repurchase over five years, when shares were trading at $8.00. However, the company has only bought back $33 million worth of stock over the past 2.5 years, which Kanen Wealth Management views as a missed opportunity given the stock’s current performance and the company’s "stronger earnings momentum, a fortified balance sheet, and even more excess cash."
Highlighting the valuation disparity between EZCORP and its competitor FirstCash (FCFS), which trades at over 12 times EBITDA compared to EZCORP’s current 6.4 times, Kanen Wealth Management emphasizes the urgency for EZCORP to take decisive action to address what it describes as a "serious credibility gap with the market." According to InvestingPro analysis, EZCORP appears undervalued, trading at a P/E ratio of just 8.02 and below its Fair Value estimate. For deeper insights into EZCORP’s valuation metrics and growth potential, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
Kanen Wealth Management’s proposal suggests that a $100 million share repurchase could potentially retire over 7 million shares, more than compensating for the 6.1 million shares issued during the convertible note settlement. The firm asserts that this action would not only be a high-return use of capital but would also serve to reaffirm EZCORP’s commitment to shareholder value.
The call for immediate action is a stark warning against what Kanen Wealth Management perceives as "weakness and indecision" in EZCORP’s current approach to capital allocation and governance. With EBITDA of $158 million in the last twelve months and a strong financial health score rated as "GREAT" by InvestingPro, the firm’s statement, based on a press release, is a clear push for the company to seize the opportunity for a corrective measure that aligns with shareholder interests. InvestingPro subscribers have access to 7 additional key insights about EZCORP’s financial position and growth prospects through the platform’s exclusive ProTips feature.
In other recent news, EZCORP Inc. reported its second-quarter 2025 earnings, with earnings per share (EPS) surpassing expectations at $0.34, compared to the projected $0.31. However, the company’s revenue fell short, reporting $306.32 million against a forecast of $310.46 million. Despite this revenue miss, EZCORP achieved a record Q2 revenue of $318.9 million, marking a 12% year-over-year increase. Canaccord Genuity maintained a Buy rating on EZCORP, with a $24 price target, highlighting the company’s strategic capital allocation plans and performance in Latin America. BTIG initiated coverage with a Neutral rating, noting EZCORP’s organic growth through increased store counts and higher loan balances. The company recently completed the retirement of its 2.375% Convertible Senior Notes due 2025, converting a significant portion into shares of EZCORP Class A Common Stock. Analysts from Canaccord believe that the market undervalues EZCORP’s turnaround in Latin America and expect the valuation gap with its peer, FirstCash, to narrow. Meanwhile, EZCORP’s management emphasized their focus on expanding digital channels and exploring mergers and acquisitions in the U.S. and Latin America.
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