Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of First Cash Financial Services (FCFS) plunged as low as 14% today after the consumer finance company cut its short-term guidance outlook.
So what: The stock has soared over the past year on strong top- and bottom-line growth, but downside guidance for the rest of the year is forcing Mr. Market to sober up. Management cited falling gold prices, Mexican peso volatility, and sluggish U.S. consumer loan growth for the weak outlook, triggering plenty of concern among investors over the headwinds working against it.
Now what: Management now sees full-year EPS of $2.75-$2.90, down from a prior view of $3.10-$3.24 and also below Wall Street's forecast of $3.12. "The pawn industry has thrived over the course of numerous and various economic cycles and we expect that long-term growth opportunities will continue to remain attractive," said CEO Rick Wessel. "We believe that short-term volatility in gold prices has a limited impact on our core growth strategy." With the stock now off about 20% from its 52-week highs and trading at a PEG ratio below 1, today's pullback might be providing a good chance to buy into that long-term bullishness.
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