FirstCash Holdings, Inc. (FCFS) Hits Fresh High: Is There Still Room to Run?

Have you been paying attention to shares of FirstCash Holdings (FCFS)? Shares have been on the move with the stock up 11.5% over the past month. The stock hit a new 52-week high of $131.46 in the previous session. FirstCash Holdings has gained 21.2% since the start of the year compared to the 7.9% move for the Zacks Business Services sector and the 7% return for the Zacks Financial Transaction Services industry.

What's Driving the Outperformance?

The stock has a great 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 February 1, 2024, FirstCash reported EPS of $2.04 versus consensus estimate of $1.91 while it missed the consensus revenue estimate by 0.83%.

For the current fiscal year, FirstCash is expected to post earnings of $6.90 per share on $3.48 billion in revenues. This represents a 13.86% change in EPS on a 10.42% change in revenues. For the next fiscal year, the company is expected to earn $8.16 per share on $3.73 billion in revenues. This represents a year-over-year change of 18.36% and 7.23%, 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 is due for a pullback from this level.

On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb 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 F, respectively, giving the company a VGM Score of A.

In terms of its value breakdown, the stock currently trades at 19.1X current fiscal year EPS estimates, which is a premium to the peer industry average of 14.9X. On a trailing cash flow basis, the stock currently trades at 7.6X versus its peer group's average of 9.1X. 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 still be poised for more gains ahead.

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 INTERNATIONAL MONEY EXPRESS, INC. (IMXI). IMXI has a Zacks Rank of # 1 (Strong Buy) and a Value Score of A, a Growth Score of A, and a Momentum Score of F.

Earnings were strong last quarter. INTERNATIONAL MONEY EXPRESS, INC. beat our consensus estimate by 7.69%, and for the current fiscal year, IMXI is expected to post earnings of $2.22 per share on revenue of $691.9 million.

Shares of INTERNATIONAL MONEY EXPRESS, INC. have gained 7.4% over the past month, and currently trade at a forward P/E of 9.93X and a P/CF of 9.83X.

The Financial Transaction Services industry is in the top 27% of all the industries we have in our universe, so it looks like there are some nice tailwinds for FCFS and IMXI, even beyond their own solid fundamental situation.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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