Analyzing FirstCash, Inc.'s (NasdaqGS:FCFS) track record of past performance is a valuable exercise for investors. It enables us to reflect on whether or not the company has met expectations, which is a powerful signal for future performance. Today I will assess FCFS's recent performance announced on 30 June 2019 and compare these figures to its long-term trend and industry movements.
Was FCFS's recent earnings decline worse than the long-term trend and the industry?
FCFS's trailing twelve-month earnings (from 30 June 2019) of US$157m has declined by -6.4% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 21%, indicating the rate at which FCFS is growing has slowed down. What could be happening here? Well, let's look at what's going on with margins and whether the whole industry is feeling the heat.
In terms of returns from investment, FirstCash has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. However, its return on assets (ROA) of 7.9% exceeds the US Consumer Finance industry of 6.1%, indicating FirstCash has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for FirstCash’s debt level, has declined over the past 3 years from 16% to 11%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 45% to 48% over the past 5 years.
What does this mean?
FirstCash's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Companies that are profitable, but have unpredictable earnings, can have many factors affecting its business. I suggest you continue to research FirstCash to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for FCFS’s future growth? Take a look at our free research report of analyst consensus for FCFS’s outlook.
- Financial Health: Are FCFS’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 June 2019. This may not be consistent with full year annual report figures.
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If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.