|Shares Out. (in M):||0||P/E|
|Market Cap (in $M):||500||P/FCF|
|Net Debt (in $M):||0||EBIT||0||0|
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The Payday Loan Sector – Sucked Down with Sub-Prime. The Long Case for EZCorp (EZPW)
The Payday Loan Industry
How Has the Payday Loan Industry Been Affected by the Sub-Prime Meltdown?
The Long Case for EZCorp (EZPW)
EZPW is, in our view, one of the best run operators in the Payday Loan Industry and currently trading at an extremely cheap valuation. The company is a multi-line operator whose traditional business was pawn shops. The company added payday lending to some of its pawn stores as well as built new stand-alone payday store-fronts. As of September 30, 2006, EZPW offered pawn loans from 280 EZPAWN locations and 369 EZMONEY loan stores. Its store base has been rapidly increasing.
At a share price of around $12.00, EZPW has a market capitalization of approximately $500 million and is debt free. The company currently generates returns on equity of around 20%. EZPW has aggressively expanded its product offerings and store base and has grown sales at double-digit rates for over five years. Margins have consistently improved over this period. We look at the company as having a predictable, recurring revenue model with strong cash flow generation.
In addition, the company has “hidden assets” including a
minority interest in a
Notice: Funds affiliated with the author are long shares of EZPW.
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