Canaccord Genuity has maintained a Buy rating for EZCORP (NASDAQ: NASDAQ:EZPW) with a consistent price target of $19.00.
The firm's recent survey of 102 pawn stores in the United States revealed encouraging signs of business performance as the holiday season approaches. Insights from store managers and employees suggest a diverse customer demographic, including middle and upper-class individuals, are frequenting pawn stores more often.
The research conducted this week marks the eighth series of store checks since Canaccord Genuity began covering EZCORP 21 months ago. The firm's analysts revisited stores they had previously checked, including two in Dallas where they had conversations with store managers. The feedback from these managers was positive, indicating recent successful operations at their locations.
Employees from various pawn stores also contributed to the findings, noting an increase in customers from "all walks of life."
The uptick is seen as a response to the challenging economic climate, where inflation and uncertainty have led to a greater demand for pawn loans. The diverse customer base is a testament to the pawn industry's resilience and appeal across different economic segments.
Canaccord Genuity's latest report included a slight adjustment to their estimates for EZCORP, but the overall outlook remains positive. The firm's continued confidence in the pawn operator is reflected in their reiteration of the Buy rating and price target, suggesting a stable investment outlook for EZCORP's shares.
In other recent news, EZCORP reported a record high for Q3 revenue and Pawn Loan Balances (PLO). Total revenue saw a 9% increase, reaching $280 million, the highest for a third quarter in the company's history.
Pawn loan balances surged by 15% to a record $265 million. Adjusted net income also rose by 14%. The company has expanded its operations, opening 12 new locations this quarter, bringing the total to 1,258 stores.
EZCORP has also announced a definitive agreement to purchase 53 pawn stores in Mexico from Presta Dinero, marking a significant expansion in the growing Mexican market. The acquisition is expected to diversify the company's product offerings and reach new customer demographics.
InvestingPro Insights
To complement Canaccord Genuity's positive outlook on EZCORP (NASDAQ:EZPW), recent data from InvestingPro provides additional context to the company's financial health and market performance. EZCORP's revenue growth of 12.41% over the last twelve months as of Q3 2024 aligns with the observed increase in customer diversity and store activity noted in the survey. This growth is further supported by a strong gross profit margin of 58.57%, indicating efficient operations despite economic challenges.
InvestingPro Tips highlight that EZCORP's net income is expected to grow this year, and analysts predict the company will remain profitable. These projections reinforce Canaccord Genuity's Buy rating and suggest that EZCORP is well-positioned to capitalize on the increased demand for pawn services across various economic segments.
The company's P/E ratio of 7.73 and Price to Book ratio of 0.75 suggest that EZCORP's stock may be undervalued relative to its earnings and assets, potentially offering an attractive entry point for investors bullish on the pawn industry's prospects.
For readers interested in a deeper analysis, InvestingPro offers 5 additional tips that could provide further insights into EZCORP's investment potential.
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