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FirstCash Holdings, Inc. (FCFS) Hit a 52 Week High, Can the Run Continue?
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Shares of FirstCash Holdings (FCFS - Free Report) have been strong performers lately, with the stock up 9.9% over the past month. The stock hit a new 52-week high of $117.67 in the previous session. FirstCash Holdings has gained 8.5% since the start of the year compared to the 24.6% move for the Zacks Business Services sector and the 27.9% return for the Zacks Financial Transaction Services industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on October 26, 2023, FirstCash reported EPS of $1.56 versus consensus estimate of $1.4.
For the current fiscal year, FirstCash is expected to post earnings of $7.15 per share on $3.16 billion in revenues. Meanwhile, for the next fiscal year, the company is expected to earn $7.95 per share on $3.4 billion in revenues. This represents a year-over-year change of 21.6% and 7.76%, respectively.
Valuation Metrics
FirstCash may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
FirstCash has a Value Score of A. The stock's Growth and Momentum Scores are B and D, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 16.4X current fiscal year EPS estimates, which is a premium to the peer industry average of 13.2X. On a trailing cash flow basis, the stock currently trades at 7.3X versus its peer group's average of 8.7X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, FirstCash currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if FirstCash passes the test. Thus, it seems as though FirstCash shares could have a bit more room to run in the near term.
How Does FCFS Stack Up to the Competition?
Shares of FCFS have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is PagSeguro Digital Ltd. (PAGS - Free Report) . PAGS has a Zacks Rank of # 1 (Strong Buy) and a Value Score of A, a Growth Score of C, and a Momentum Score of D.
Earnings were strong last quarter. PagSeguro Digital Ltd. beat our consensus estimate by 7.69%, and for the current fiscal year, PAGS is expected to post earnings of $1.21 per share on revenue of $3.07 billion.
Shares of PagSeguro Digital Ltd. have gained 8.6% over the past month, and currently trade at a forward P/E of 10.9X and a P/CF of 8.3X.
The Financial Transaction Services industry is in the top 43% of all the industries we have in our universe, so it looks like there are some nice tailwinds for FCFS and PAGS, even beyond their own solid fundamental situation.
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FirstCash Holdings, Inc. (FCFS) Hit a 52 Week High, Can the Run Continue?
Shares of FirstCash Holdings (FCFS - Free Report) have been strong performers lately, with the stock up 9.9% over the past month. The stock hit a new 52-week high of $117.67 in the previous session. FirstCash Holdings has gained 8.5% since the start of the year compared to the 24.6% move for the Zacks Business Services sector and the 27.9% return for the Zacks Financial Transaction Services industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on October 26, 2023, FirstCash reported EPS of $1.56 versus consensus estimate of $1.4.
For the current fiscal year, FirstCash is expected to post earnings of $7.15 per share on $3.16 billion in revenues. Meanwhile, for the next fiscal year, the company is expected to earn $7.95 per share on $3.4 billion in revenues. This represents a year-over-year change of 21.6% and 7.76%, respectively.
Valuation Metrics
FirstCash may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
FirstCash has a Value Score of A. The stock's Growth and Momentum Scores are B and D, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 16.4X current fiscal year EPS estimates, which is a premium to the peer industry average of 13.2X. On a trailing cash flow basis, the stock currently trades at 7.3X versus its peer group's average of 8.7X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, FirstCash currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if FirstCash passes the test. Thus, it seems as though FirstCash shares could have a bit more room to run in the near term.
How Does FCFS Stack Up to the Competition?
Shares of FCFS have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is PagSeguro Digital Ltd. (PAGS - Free Report) . PAGS has a Zacks Rank of # 1 (Strong Buy) and a Value Score of A, a Growth Score of C, and a Momentum Score of D.
Earnings were strong last quarter. PagSeguro Digital Ltd. beat our consensus estimate by 7.69%, and for the current fiscal year, PAGS is expected to post earnings of $1.21 per share on revenue of $3.07 billion.
Shares of PagSeguro Digital Ltd. have gained 8.6% over the past month, and currently trade at a forward P/E of 10.9X and a P/CF of 8.3X.
The Financial Transaction Services industry is in the top 43% of all the industries we have in our universe, so it looks like there are some nice tailwinds for FCFS and PAGS, even beyond their own solid fundamental situation.