As you might know, FirstCash, Inc. (NASDAQ:FCFS) recently reported its yearly numbers. Results were roughly in line with estimates, with revenues of US$1.9b and statutory earnings per share of US$3.81. Following the result, analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Following the latest results, FirstCash's six analysts are now forecasting revenues of US$1.93b in 2020. This would be a satisfactory 3.7% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to increase 8.5% to US$4.15. Before this earnings report, analysts had been forecasting revenues of US$1.96b and earnings per share (EPS) of US$4.33 in 2020. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but analysts did make a minor downgrade to their earnings per share forecasts.
The consensus price target held steady at US$94.50, with analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic FirstCash analyst has a price target of US$105 per share, while the most pessimistic values it at US$82.00. Still, with such a tight range of estimates, it suggests analysts have a pretty good idea of what they think the company is worth.
It can also be useful to step back and take a broader view of how analyst forecasts compare to FirstCash's performance in recent years. It's pretty clear that analysts expect FirstCash's revenue growth will slow down substantially, with revenues next year expected to grow 3.7%, compared to a historical growth rate of 23% over the past five years. Compare this against other companies (with analyst forecasts) in the market, which are in aggregate expected to see revenue growth of 11% next year. Factoring in the forecast slowdown in growth, it seems obvious that analysts still expect FirstCash to grow slower than the wider market.
The Bottom Line
The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for FirstCash. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. The consensus price target held steady at US$94.50, with the latest estimates not enough to have an impact on analysts' estimated valuations.
With that in mind, we wouldn't be too quick to come to a conclusion on FirstCash. Long-term earnings power is much more important than next year's profits. We have forecasts for FirstCash going out to 2022, and you can see them free on our platform here.
You can also view our analysis of FirstCash's balance sheet, and whether we think FirstCash is carrying too much debt, for free on our platform here.
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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.