Cash America International (
CSH) recently announced that it will acquire an 80% ownership interest in a 100 store chain of pawnshops in Mexico. CSH noted that this transaction would allow it to acquire what is believed to be the second largest privately owned pawn chain in Mexico through a majority purchase of the parent company which owns and operates the business.
Company Description
Cash America International owns and operates pawnshops in the United States. It offers pawn loans, short-term cash advances, check cashing services, and other specialty financial services to individuals. The company also sells merchandise in its pawnshops, primarily personal property that has been forfeited in connection with its pawn lending operations. The company offers unsecured cash advances through its pawn lending locations, its cash advance locations and via the Internet.
Growth through Acquisitions
The Zacks #1 Rank (?strong buy?) company recently announced that it will acquire an 80% ownership interest in a 100 store chain of pawnshops in Mexico. CSH noted that this transaction would allow it to acquire what is believed to be the second largest privately owned pawn chain in Mexico through a majority purchase of the parent company which owns and operates the business.
CSH added that the acquisition is expected to be completed late in the fourth quarter of 2008 following the
satisfactory completion of formal documentation, licensing, due diligence, financing and other matters customary in such transactions.
Growth and Income were part of CSH's Second Quarter
Cash America posted second-quarter results and declared a dividend in late July. Earnings per share of 67 cents topped the year-prior 43 cents and exceeded the consensus estimate by 6%. The earnings result also came in above CSH's upwardly revised guidance that ranged between 62 and 64 cents, which was upped because of more favorable loan loss expenses in the quarter. Total revenue jumped 16% year-over-year.
Commenting on the results of the quarter, Daniel R. Feehan, President and Chief Executive Officer of Cash America
said, ?The results of the second quarter finished above our initial estimates as earnings from our pawn related lending
activities were particularly strong during the quarter. Higher loan demand continued our trend of increased revenue
from pawn loans and we experienced better than expected retail sales activity during the quarter, partially aided by the
tax stimulus payments received by many of our customers. In addition, loan losses related to our cash advance product
continued to moderate leading to a significant improvement in our operating income margins generating the 56%
increase in earnings per share on a 16% rise in total revenue.?
Results for the third quarter are scheduled to be released on October 23.
Cash America also declared a regular quarterly dividend of 3.5 cents per share, which was paid out on August 20, 2008. The company's yield of 0.4% is above the industry average as most companies within CSH's industry group pay no income.
Estimates are Up
Analyst full-year forecasts for earnings of $3.12 per share increased from $3.05 over the past 90 trading days.
