It isn't illegal unless it is untrue.
If it were untrue, they wouldn't have said it.
A few days after Moody's.
Management's plan to regain investment grade ratings by year's end appears to be on track.
I'm thinking we get a presser after the close announcing when the earnings release will be.....maybe later in the week, or else next week. Just a guess.
The stock is up $1.50 in pre-market trading this morning to $25.85.
As noted in a prior post, the company has more than $300mm of LTM FCF.
The company has announced it will refranchise 1,000 company-owned stores
over the next 3-4 years. I have estimated that could raise $750mm in proceeds.
If we assume that FCF in each of the next three years averages $250mm annually,
then the company will generate $1.5 billion in cash over three years.
That compares to the current equity market cap of $1.75 billion.
That makes these shares ridiculously cheap and completely explains why the
Board has decided to take this step.
1) Upcoming earnings Report
Date expected: About May 9th but before May 16th
a) Good earnings results demonstrated with Grupo Finmart deconsolidated as a "discontinued operation" giving us a first look at the company's results without GF both for Q2 but also for Q1 (by backing out the 3 month numbers from the 6 month numbers)
b) Possible decision on GF: They may announce a decision to proceed with a sale of GF to a third party or a deal to put it into a JV that they do not control, or (unlikely in my view) a decision to put it into runoff and shut it down). Clearly the latter two would be considered bad news and could hurt the stock price, while the first would be good news and help the stock price.
c) An announcement of a writedown of the GF entity. Although this seems unlikely after the 10-K filing reiterated its value, they could use the excuse that further analysis revealed an impairment. Obviously this would hurt the stock.
d) Later, an announcement of a sale of GF could be made; That would be a major positive catalyst.
e) Announcement of a buyback.
The shares sell for substantially less than book value and even less than tangible book value.
I think the market would react positively to a share repurchase announcement using some of the proceeds from the GF sale. However, management has said they want to use the cash to buy more pawn shops.
f) FTC Requires First Cash to sell stores to do merger with Cash America. The recent merger deal announcement is likely to further incent EZPW to do M&A deals. if the FTC requires their merging competitors to sell some locations because of anti-trust issues (think Staples/Office Depot). That would be bullish for EZPW, a logical buyer.
Can anybody think of any others?
it completely depends on a variety of "personal factors" including such things as:
1) What other assets do you own?
2) How old are you?
3) How much is your life savings/
4) Are you including your retirement accounts in that calculation or just your taxable investment account.
5) How much do you earn? Is it enough to live on?
6) Do you have dependents (a wife, children, elderly parents to care for)?
Let's say you are a single 25 year old with $10,000 to invest outside your IRA/401K account, with a job that covers your expenses: Then I say go for it.
But, If you are a 45 year old guy with a wife two kids and a mortgage, looking to invest 75% of your annual income, then obviously, no, don't do it.
Funny question, though.
Remember, diversification is the only "free lunch" on Wall Street.
It is already a buy.
They bought back about 10% of the stock during 16Q1 and now have only about 70 million shares outstanding. Therefore, at $25 the equity market cap is just $1.75 billion.
Yet, last 12 months FCF is more than $325 million.
$325 / $1,775 = 18.5%
You can't get an 18.5% FCF yield practically ANYWHERE.
Yes, there are problems. competition from AMZN is largest among them.
However, I expect that the company's 3-year program to refranchise more than
1,000 company-owned stores, is likely to generate more than $500 million in
proceeds. Add in 3 years of FCF at the $250 million level and the company will be
generating more than $1.25 billion in FCF over 3 years on a $1.75 billion equity
So, unless you think the company's business will completely implode (and that was
not the impression I got from reading the conference call transcript), the stock is a
solid buy here.
All IMHO, FWIW, DYODD
On what basis did you make that valuation conclusion?
Others here and the Hedge Fund manager that published on Seeking Alpha have concluded that $15 is the valuation....
This week the "Rating Outlook" was upgraded to Stable from Negative.
The actual Ba1 rating itself remains the same.
This is the first necessary step for the company to achieve a rating upgrade to IG in order to be able to refinance the February maturity in the unsecured bond market.
it's all part of the plan which is going according to script.
I've been around the block a few times and aside from crystallizing what the value for the underlying business can be in a takeout, I view it as negative, as EZPW will face a larger, tougher competitor with greater economies of scale relative to being a public company.
Speaking of bozos............
Try watching the CNBC special on Costco.
You might learn something.
They sell large packages of stuff to consumers who can afford them and who have the space to store them until they are needed because they are relatively wealthy and have large houses.
As of the end of the conference call, XRX is at $9.75 down $1.42.
The company cut its Cash Flow and Free Cash Flow guidance by $300-$350 million for the year.
However, $200-$250 million of the cut reflects expenses related to the separation, which the company expects to complete by the end of the year (Form 10 expected to be filed in July).
Also, and maybe this is a bigger impact on the stock price, is that the company announced it would not complete and share repurchases in 2016 because the company wants to reduce debt in order to prepare the two separate entities for life on their own.
Anyhow, this selloff is a big over-reaction in my opinion.