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Why EZCORP Inc. Shares Soared

By Brian Pacampara – Jan 29, 2014 at 8:48AM

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Is this meaningful? Or just another movement?

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 pawnshop operator EZCORP (EZPW 1.18%) surged 18% today after its quarterly results easily topped Wall Street expectations.

So what: The stock has plummeted over the past year on declining revenue, but today's blowout Q1 results -- adjusted EPS of $0.49 versus the consensus of just $0.38 -- suggest things are beginning to turn. In fact, same-store sales during the quarter increased a solid 8%, prompting pleasantly surprised analysts to quickly boost their growth estimates.

Now what: Management remains bullish about EZCORP's long-term turnaround prospects. "By the third quarter, we expect to see significant improvements in our year-over-year comparisons and the fourth quarter will show significant growth to the same quarter last year, as all of our operating segments and channels contribute to earnings," said President and CEO Paul Rothamel. "That run rate should then carry us to fiscal 2015 when we expect to deliver growth in all of our businesses with the online selling and lending channels growing fastest, followed by our Latin America businesses and our U.S. storefronts." More important, with the stock still off about 50% from its 52-week highs and trading at a forward P/E of 7, there seems like plenty of room left to buy into that bullishness. 

Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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