Zacks_Analysts' Blog : EZCORP's Expansion Plans - Analyst Blog

Austin, Texasbased EZCORP Inc. (EZPW) a leading provider of specialty financial services, is on an expansion mode. For 2011, the company plans to open approximately 110 new stores, including 55 to 60 pawn stores in Mexico, 35 to 40 short-term consumer loan stores in Canada, and 10 pawn stores in the United States.

The company currently operates 1006 stores worldwide and is the second largest operator of pawn stores in the United States. EZCORP opened 53 pawn stores in Mexico, 50 short-term consumer loan stores in Canada and 1 in United States, and 10 pawn stores in the United States in 2010. The company also acquired 16 pawn stores in the U.S. during fiscal 2010, of which 8 are located in Central and South Florida, 5 in Chicago, 2 in Corpus Christi, Texas and  one in Las Vegas, Nevada.

We believe the opening of new stores will increase the market share of the company. In fact, the company should open more stores in Canada, as the short-term consumer loan industry in Canada is growing fast, whereas the pawn industry in the United States is large and highly fragmented. The industry in Mexico is also fragmented and less opportune for the company’s growth.

EZCORP reported a profit of 56 cents during the fourth quarter of 2010, ahead of the Zacks Consensus Estimate of 53 cents and year-ago quarter’s earnings of 42 cents per share. Total revenue for the quarter jumped 20% year over year to $198.2 million and operating income climbed 32% to $40.1 million.

In fiscal 2010, EZCORP‘s earnings grew to $1.96 from $1.42 in the prior year. Total revenue grew 23% to $733.0 million while operating income increased 40% to $141.9 million.

For 2011, the company expects adjusted earnings to increase 20% from the prior year to $2.35.

EZCORP currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock.

Primary competitors of EZCORP include Cash America International Inc. (CSH) and First Cash Financial Services Inc. (FCFS).