Cash America shares jump on 'buy' rating

Cash America shares rise after Janney gives it a 'buy' rating

Associated Press

NEW YORK (AP) -- Shares of Cash America International Inc. jumped Tuesday after a Janney Capital Markets analyst upgraded the pawn shop operator and payday lender's stock rating.

THE SPARK: Analyst Sameer Gokhale upgraded Cash America's stock rating to "buy" from "neutral," telling investors that the stock "looks like a golden opportunity."

He also raised his earnings estimates on Cash America for 2013 and 2014.

THE ANALYSIS: Gokhale said that Cash America may benefit even as U.S. regulators clamp down on online payday lenders. He says that Cash America invests about $20 million annually to make sure its online payday lending subsidiary Enova is compliant with state and federal laws.

Gokhale said in a note to clients that lenders that aren't compliant may eventually leave the market, which would benefit Enova.

Cash America did not immediately respond to an emailed request for comment.

Gokhale raised Cash America's 2013 and 2014 earnings estimate to $4.28 per share and $4.90 per share, respectively. That's up from Gokhale's previous estimates of $4.26 per share for 2013 and $4.69 per share for 2014.

THE BIG PICTURE: Cash America makes money from loans to consumers, from service fees and from selling jewelry, electronics and other goods in its pawn shops. Last month, the company posted second-quarter results that missed Wall Street expectations. It also cut its full-year and third-quarter earnings estimates.

For the third quarter, Cash America foresees earnings of 75 cents to 85 cents per share. Full-year earnings are expected in a range of $4.15 to $4.35 per share.

SHARE ACTION: Shares rose $3.28, or 8 percent, to $44.51 in afternoon trading Tuesday. Shares are down 18 percent from the 52-week high of $54.12 it reached in March.

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