Cash America International (NYSE: CSH) offers
secured non-recourse loans, known as pawn loans, through 501 locations in 22 states under the brand names Cash America Pawn and SuperPawn. Customers collateralize high-interest loans with such possessions as jewelry and electronics. If the loans aren't repaid, the firm sells the collateral in its stores. The company also offers short-term cash advances in many of its stores, including 292 locations that offer this service under the brand names Cash America Payday Advance and Cashland. Short-term advances are also offered over the Internet, to customers in the U.S. and the U.K. The firm provides check cashing services through 135 franchised and company-owned "Mr. Payroll" outlets.
Cash America pleased the Street earlier in the week, when it said that revenues from pawn loans, merchandise sales and on-line cash advances were expected to boost Q2 earnings above previous guidance. Management projected EPS of 62-64 cents, a range well above the 51-54 cents anticipated in April. The Street was looking for 53 cents.
CSH shares
popped through several levels of important moving average resistance on the news and have now begun to define a bullish "flag" consolidation pattern. Prices frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Brokers recommend the issue with two "strong buys", two "buys" and two "holds". Analysts see a 15% average annual growth rate, through the next five years. The CSH P/E ratio (11.32), PEG ratio (0.78), Price to Sales ratio (0.98), Price to Book ratio (1.80), Price to Cash Flow ratio (7.81), Price to Free Cash Flow ratio (4.90), Sales Growth rate (12.56%), EPS Growth rate (36.51%), Return on Assets (10.30%) and Return on Investment (12.10%) compare favorably with industry, sector and S&P 500 averages. Institutions own about 96% of the outstanding shares. The stock is one of those used to calculate the S&P 600 SmallCap Index. Over the past twelve months, it has traded between $26.17 and $48.86. A stop-loss of $32.75 looks good here. Note that the firm is expected to announce Q2 results on July 24th, before the open.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold a position in the stock discussed above.
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