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Looking at FirstCash, Inc.’s (NASDAQ:FCFS) earnings update on 31 December 2018, it seems that analyst expectations are fairly bearish, with earnings expected to grow by 9.7% in the upcoming year against the higher past 5-year average growth rate of 17%. Presently, with latest-twelve-month earnings at US$153m, we should see this growing to US$168m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
How will FirstCash perform in the near future?
The longer term expectations from the 5 analysts of FCFS is tilted towards the positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of FCFS’s earnings growth over these next few years.
This results in an annual growth rate of 11% based on the most recent earnings level of US$153m to the final forecast of US$212m by 2022. This leads to an EPS of $5.47 in the final year of projections relative to the current EPS of $3.42. In 2022, FCFS’s profit margin will have expanded from 8.6% to 10%.
Future outlook is only one aspect when you’re building an investment case for a stock. For FirstCash, there are three relevant 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 FirstCash 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 FirstCash is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of FirstCash? 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 firstname.lastname@example.org.