Market does not like uncertainty. Now that we know that EZPW took the best shot that downside gold had to offer and main business prospects seem ok, then on valuation basis this stock is cheap. I think so. Yep, I do.
You are correct, management is certain there is a problem ahead. The certainty is their public acknowledgement and quantification of the problem and formulating a business solution to solve the problem. These problematic business issues are addressed by capable business management everyday. Solutions in this uncomplicated business require diligent attention to problems when the arise. The fix it cycle of a significant problem like the collapse in the price of gold is not immediate. The main business prospects are intact and the past growth of this basic industry bodes well for the future.
Management's recent announcement summarizes their response to recent events and plans to face the problem (add a net of ~85 stores and take charges for the stores being closed.) Accounting for their earnings warning, the company is likely to earn $2.00 per share this year. Analysts say it will grow about 12.5% per year for the next five years. What do you think is a fair PE for the company?