Cash America's Pawnshop Swap

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Cash America International (NYSE: PWN) is in the secured non-recourse lending business. That is, it operates pawnshops. In fact, the company operates quite a few: more than 700. This means the company is the world's largest operator of pawnshops.

Cash America is certainly profitable. Last quarter, the company posted a 63% increase in profits to $7.3 million. Revenues increased 23% to $115.8 million.

Essentially, the U.S. is a growth market for pawnshops. This explains Cash America's deal yesterday, in which it said it would sell off two European units and purchase a 41-store SuperPawn chain, which is located in Nevada, Arizona, Washington, and California.

For its European sale, Cash America received a nifty sum of $128 million in cash and a note for $12.5 million.

As for the SuperPawn purchase, it provides market penetration into the Western U.S. So far, the SuperPawn stores have focused on pawn loans. However, Cash America will put more resources into the cash advance business, which should boost growth. In all, the deal for SuperPawn comes to roughly $125 million.

What's more, Cash America will provide some more cash to its shareholders in a one-time dividend of $0.30 per share. The company also confirmed guidance for the third quarter of $0.28 to $0.31 per share. In all, investors showed their appreciation by boosting the stock price $1.10 to $24.65.

As Fool Seth Jayson pointed out, there is unmet demand for pawnshops -- an area avoided by major financial institutions, such as Bank of America (NYSE: BAC) and Citigroup (NYSE: C). But there are companies filling the void, such as ACE Cash Express (Nasdaq: AACE), Cash America, EZCorp (Nasdaq: EZPW), and First Cash (Nasdaq: FCFS).

Fool contributor Tom Taulli owns none of the shares mentioned in the article.