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Examining FirstCash, Inc.'s (NasdaqGS:FCFS) past track record of performance is a valuable exercise for investors. It enables us to understand whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess FCFS's latest performance announced on 31 March 2020 and weigh these figures against its longer term trend and industry movements.
Have FCFS's earnings improved against past performances and the industry?
FCFS's trailing twelve-month earnings (from 31 March 2020) of US$155m has increased by 0.4% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 23%, indicating the rate at which FCFS is growing has slowed down. To understand what's happening, let's look at what's going on with margins and whether the rest of the industry is experiencing the hit as well.
In terms of returns from investment, FirstCash has fallen short of achieving a 20% return on equity (ROE), recording 13% instead. However, its return on assets (ROA) of 8.1% exceeds the US Consumer Finance industry of 5.5%, indicating FirstCash has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for FirstCash’s debt level, has increased over the past 3 years from 9.5% to 12%.
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. While FirstCash has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. 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 31 March 2020. This may not be consistent with full year annual report figures.
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.
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