Wow, what a jump! Is this gain a short term "pump and dump" or is this the start of another up-trend? I read the news articles this morning and EZPW raised guidance like crazy so I assume that is the reason for the high volume gain today. My concern is whether or not it can sustain this momentum. Thoughts?
The reasons it is a new uptrend are many. New quarterly high for earnings. Next two quarters are by far their best. Capital spending much lower in future because latest expansion is pretty much over. Many new stores are yet to be profitable. I would bet anything that next quarters earnings will be over $1.00. Their quarter one report was the last one that developed an uptrend without a correction because it was a perfect earnings report with no negatives. Their second quarter was a huge beat but they announced over the next two quarters they had an ambitious expansion plan that would lower earnings due to capital spending. In quarter three they reported a beat on earnings but they were lower than quarter two which caused that correction. The earnings they pre-announced this quarter were despite that capital spending on store expansion. Now that that capital spending is over and the next quarter will be one of their two best ones, I again reiterate earnings will be over $1.00 next quarter.