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FirstCash, Inc.’s (NASDAQ:FCFS) most recent earnings announcement in December 2018 signalled that the company benefited from a small tailwind, leading to a single-digit earnings growth of 6.5%. Below, I’ve laid out key numbers on how market analysts perceive FirstCash’s earnings growth outlook over the next few years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
Market analysts’ consensus outlook for this coming year seems rather muted, with earnings rising by a single digit 9.7%. The growth outlook in the following year seems much more optimistic with rates generating double digit 28% compared to today’s earnings, and finally hitting US$212m by 2022.
While it is helpful to understand the growth rate year by year relative to today’s value, it may be more insightful to evaluate the rate at which the company is rising or falling every year, on average. The pro of this technique is that we can get a bigger picture of the direction of FirstCash’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I’ve inserted a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 11%. This means, we can presume FirstCash will grow its earnings by 11% every year for the next few years.
For FirstCash, I’ve put together three essential aspects you should look at:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is FCFS worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether FCFS is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of FCFS? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.