Is pawnshop operator First Cash Financial
When Motley Fool Inside Value chief analyst Philip Durell chose similarly situated payday lender Advance America
That apparently was the high point for the industry. It has gone flat since, rising only a little more than 1%, with Dollar Financial
A pawnshop owning a car dealer? While initially it might not seem a natural fit, Auto Master was a privately held chain of eight "buy here/pay here" dealerships where car buyers with bad credit could drive away in the used car of their choice. After a small down payment, car loans are repaid on a weekly or biweekly payment schedule. Financing vehicle sales to the subprime market is actually a logical extension of the pawnshop/payday lending business in which First Cash excels. Moreover, with the FDIC and various states clamping down on various aspects of the payday lending business, the car dealerships are seen as a necessary diversification. First Cash plans on opening another three to five dealerships by the end of 2007.
Even in the challenging economic climate in which payday lenders find themselves, they are still seeing profit potential rise. First Cash noted in its Auto Master acquisition that it should be able to garner a larger share of the market through better-coordinated advertising and inventory selection. It believes the acquisition will increase earnings in the fourth quarter and raised guidance to $0.96-$0.97 per share, up from prior estimates of $0.94-$0.95. EZ Corp
First Cash Financial still trades at a premium to most of its competitors on a forward basis, along with QC Holdings
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