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EZCORP, Inc. Message Board

  • coconut1@bellsouth.net coconut1 Jul 3, 2013 10:30 AM Flag

    Management warned on the 3rd Quarter.

    Management operates the company. Traders do not. Management warned on the 3rd Quarter. Take the hint people. Short this one. You can not hold it up artificially forever.

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    • Accounting for management's guidance, the company should earn $2.00 per share. Analysts estimate that the company will grow ~12.5% per year for the next five years. What would you estimate is a fair PE for the stock of the company.?

      • 2 Replies to jagad5
      • The problem with EZCorp is that we can see from the time it took Mr Rotunda and his team to learn to run it successfully that it is a difficult company to run well. The transition to Mr Rothamel and his team was fairly abrupt, and they have shown competence but not brilliance (the switch from forward gold sales to more active forms of hedging was timed unfortunately, for instance). Meanwhile, there have been a couple of stumbles on the investment banking side (certainly the failed Cash Converters merger and the disorderly financing of the Crediamigo deal; possibly a bum deal for an online loan business). The company shows no inclination to look at investment bankers other than Mr Cohen. There is no way for the majority of owners to gently urge changes in company behavior. And while 12%+ growth looks good, it is anemic compared to growth in the late Rotunda years.

        I personally adore the store-within-a-store look, but I'm not the real target market. I have a sneaking suspicion that SWIS is better for suburban expansion, but it may be preferable to keep the "old look" in center city locations.

        So an you really talk about a "fair" P/E for a company that is certainly heading for difficulties (the EASY part of the business is gold) and may be headed for genuine trouble? I have a longer-than-average investment time horizon, but we may be looking at 5+ years to see substantial stock price increases.

      • coconut1@bellsouth.net coconut1 Jul 5, 2013 3:09 PM Flag

        Forget analysts estimates. Look at the business. The company is not strong enough to pay dividends. They depend on a very select retail market. They announce they do not expect to do well and they are closing some of their stores further limiting business.

        These guys are in trouble.

 
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