Thursday, First Cash Financial Services, Inc. (FCFS) said that it is raising its fourth-quarter earnings guidance due to stronger than expected revenue from its pawn operations in the U.S. and Mexico and sale of its West Coast stores.
First Cash's earlier fourth-quarter earnings guidance was in the range of $0.37 to $0.39 per share, including earnings of $0.05 per share from its West Coast payday lending stores.
With the announced sale of the West Coast stores and better-than-expected fourth quarter revenue, the company now expects fourth-quarter EPS, excluding earnings from West Coast stores, in the range of $0.42 to $0.44. On average, eight analysts polled by Thomson Reuters expect earnings of $0.41 for the quarter. Analysts' estimates typically exclude one-time items.
First Cash's earlier full-year earnings' guidance was $1.37 to $1.39 per share. Despite excluding the $0.05 EPS from West Coast stores, the full-year EPS guidance is still $1.37 to $1.39 per share due to stronger than expected operating results from the company's pawn operations.
The increased guidance range implies estimated year-over-year earnings growth of approximately 20% to 26% for the fourth quarter of 2009 and 12% to 14% for the full year.
Rick Wessel, CEO, First Cash, said, "Retail sales, including the just completed holiday shopping season, were up solidly in the U.S. and were exceptionally strong in Mexico. In addition, sales of scrap jewelry have increased throughout the quarter based on the strength of transaction volumes and increased gold prices."
First Cash intends to sell its West Coast check-cashing/payday lending operations and signed an agreement in December to sell all 22 of its stores located in California, Washington and Oregon. The purchaser, privately-held California Check Cashing Stores, LLC, completed the all-cash transaction to acquire the Company's 18 California and Oregon locations on December 29, 2009 and expects to close on the four Washington locations in early 2010.
Looking ahead, the company expects 2010 EPS from continuing operations in the range of $1.53 to $1.59 per share. Analysts expect the company to report full year earnings of $1.62 in 2010. The projection expects the $0.05 EPS from company's West Coast stores.
The company expects significant continued revenue and earnings growth in 2010, especially in Mexico. The majority of 2010 revenues will be derived from pawn operations, with only 11% to 13% of revenues expected to be from U.S. short-term loan and credit services operations.
The company opened/acquired a total of 66 stores in 2009, of which 63 were pawn stores. A total of 60 of the pawn store openings in 2009 were in Mexico. In 2010, First Cash anticipates opening 65 to 75 new stores, the majority of which will be in Mexico. The company does not anticipate opening any new U.S. short-term/payday loan stores.
FCFS closed Thursday's regular trading session at $22.04, up $0.35 or 1.61%, on a volume of 75,021 shares on the Nasdaq.
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