Facebook
Twitter
RSSPosts Tagged ‘Pawnshops’
Anonymous Soldier Pawns Purple Heart for Cash
December 24th, 2011
Hard times force a soldier to part with a major symbol of his military life
A-Z Outlet owner Bryan VandenBosch says a Purple Heart was sold to him in November by a West Michigan man serving in Afghanistan. The servicemember, who pawned off the precious medal because he reportedly needed money, declined an interview request with the Holland Sentinel, which first reported the story. A Purple Heart is not engraved, which makes it difficult to track down the recipient.
Flood of sympathy
The reports have sparked a flood of sympathy from across the country. Both individuals and military organizations have reached out to VandenBosch offering to buy the medal back for the anonymous soldier. But the pawnshop owner says he has no intention of selling the Purple Heart and is keeping it for the soldier, should he want it back. It’s not unusual for Purple Heart medals to appear in flea markets and for sale online. But many of those belong to deceased servicemembers, and what makes this case unusual is that the medal was sold by the recipient himself.
Authenticity
Some are questioning the authenticity of the medal, which is awarded in a special presentation case with a lapel pin. It is relatively easy for servicemembers to buy a Purple Heart, says John Bircher, national spokesman for The Military Order of the Purple Heart. They are sold for about $30 at a military base, and even though they are only meant for recipients looking for a replacement, often the sellers don’t ask for proof of eligibility. Bircher, himself a Purple Heart recipient, is among those questioning the authenticity of the medal, which has garnered immense national publicity for VandenBosch. The Military Order of the Purple Heart was among the organizations that reached out to buy the medal for the anonymous seller.
An emotional medal
The Purple Heart is “an emotional medal. It’s not one that you win. It’s one that you’re entitled to if you are killed or wounded in action. It has a special connotation of patriotism that none of the others have,” Bircher said. “It symbolizes that this individual gave his life or could’ve given his life in the defense of his country. It is a very special medal. I find it very unusual that someone would take his Purple Heart and pawn it.”
Short-Term Lenders Are Out There In Front
October 19th, 2011
The shares of Payday Loan companies are on the rise
Those who are short or facing emergencies are gravitating to lending companies, known as payday lenders, because they offer short-term loans to borrowers who often need tiding over between paychecks. Pawn shops offer similar loans, but require collateral such as jewelry or high-end electronics; those items can later be sold by the shops if the borrower defaults. The companies are pursuing a group of customers that bigger banks, focused on improving the quality of their borrowers, are avoiding.
Nationwide lending chains
Shares of nationwide chains, such as DFC Global Corp., Cash America International Inc. and First Cash Financial Services Inc., have jumped to records in recent weeks. Meanwhile, plans for two initial public offerings from the industry, including the online business of Cash America, have been filed since August.
The analysts
Analysts covering DFC, Cash America and First Cash indicate they expect earnings at all of the companies to increase by double-digit percentages in the third quarter, though it is possible earnings could disappoint. All three beat expectations in the second quarter.
Pawn shops
Those in dire need like the pawn shops because they can get loans without references or credit checked. A borrower said: “You just bring something, and they give you the loan right away.”
Loan terms
Loan terms are usually in weeks, compared with the months and years offered by banks, and the principal is relatively small. But the interest rates can be in the triple digits. In Texas, a person today taking a $500 loan from Cash America would have to repay $602.29 in two weeks. That is an annual percentage rate of more than 533%. In contrast, Citigroup Inc.’s Citibank unit offers personal loans to qualified borrowers at APRs ranging from 10.49% to 25.49% over a period of 24 to 60 months.
A permanent director
While the agency could pursue other measures regulating payday lenders, this is only likely to happen once a permanent director is in place. President Barack Obama’s pick must be confirmed by the Senate, and Republicans there have vowed to block any nominee until the agency’s structure is upgraded.
Cash America will spin off online loan operation
September 16th, 2011
It’s all about money, money and more money
The Fort Worth-based operator of pawnshops, Cash America International, said that it will spin off a majority of its online lending subsidiary, Enova International, in an initial public offering that could raise up to $500 million. Investors applauded the announcement, sending the company’s shares (ticker: CSH) up $4.11, or 7.3 percent, in heavy trading to close at $60.63, a new high.
Enova
Cash America said it will retain 35 to 49 percent of Enova after the offering, which it said is subject to market conditions. Chief Financial Officer Tom Bessant said the percentage will depend on whether underwriters exercise overallotments to meet market demand for shares. Enova makes consumer loans averaging a little more than $500 via the Internet in the US, Canada, UK and Australia. Some are short-term “payday” loans of seven to 45 days, and others, especially in the UK, are installment loans repayable over four months to three years.
Annual number
Enova made nearly 5 million loans last year, according to a disclosure statement filed Thursday with the Securities and Exchange Commission. Enova was founded in 2004 in Chicago, where its offices and management team remain. Cash America acquired Enova five years ago for about $250 million, including $35 million upfront and additional payments that were contingent on the company’s performance. Enova’s CEO will be Timothy Ho. Cash America CEO Dan Feehan will serve as executive chairman.
Great acquisition
“It’s been a wonderful acquisition,” Bessant said, but Cash America found that “the market couldn’t differentiate between Cash America’s bricks-and-mortar business and our e-commerce,” which consists entirely of Enova’s operations. He said the spinoff will give Enova “its own identity” and allow it to be valued for its own operations.
Pawn business
“Investors like the pawn business” and will likely reward Cash America for making payday lending a smaller part of its operations, said David Burtzlaff, a financial analyst who follows the company for the Dallas office of Stephens Inc. But even if U.S. laws are toughened, a growing share of the online payday business is overseas, he said, and in any event, “I don’t think the short-term credit product will be eliminated.”
Resisted
Cash America, the world’s largest pawnshop chain, initially resisted entering the payday loan business. But in 1999 it concluded that its pawn operations were losing too much business to payday lenders, and it started test-marketing the loans, which carry a fee based on loan size. Pawn loans and merchandise sales still make up most of Cash America’s revenue, but payday loans have grown steadily. In the first six months of the year, payday loan fees accounted for $256 million, or 37 percent, of the company’s $689 million in total revenue.
Tough Times Are Paying At Cash America International
August 16th, 2011
It’s a hard fact that there are businesses that find profit in others’ loss
Tough economic times and a lousy job market are usually not a recipe for business success. However, a leading provider of pawnshops and cash-advance outlets has seen its profit and revenue rise nicely in the last several quarters. Record sales and profits are expected in 2011.
Cash America
Cash America and other companies in this industry are always concerned about the specter of increased regulations on pawnshops and cash-advance businesses. But for investors willing to accept above-average volatility, these shares have appeal. Cash America International offers specialty financial services to consumers, including more than 780 lending operations in 23 states under the names “Cash America Pawn,” “SuperPawn,” “Maxit,” “Pawn X-Change,” “Cash America Payday Advance,” and “Cashland.”
Mr. Payroll
The firm operates another 112 franchised and six company-owned check-cashing centers which are operating in 18 US states under the name “Mr. Payroll.” Cash America also offers consumer loans over the Internet in 30 states, as well as internationally. The combination of high unemployment and a cautious lending environment by banks has fueled big demand for Cash America’s services. Per-share profits rose 27% in the June quarter on a 14% increase in revenue.
Gold
One factor helping results is the price of gold. Articles made from the precious metal are typically used as collateral put up by Cash America’s customers. Thus, the rising price of gold increases the company’s ability to make larger loans on which they earn interest. Higher gold prices also drive higher scrapping revenues, and boost retail revenues. Cash America stock has been quite volatile over the years. The shares dropped from $49 per share in 2008 to under $12 in 2009.
Interest rates
One reason for the volatility is that regulatory moves at the state level to limit fees and interest rates on cash advances and short-term loans can impact margins, and even cause Cash America to shutter operations in those states. Given the increased regulatory mindset in Washington, it is a valid concern for these shares. Cash America has done a good job of addressing these concerns by expanding internationally, especially its e-commerce activities.
Earnings
Analysts expect Cash America to earn $4.27 per share in 2011 and $4.94 per share in 2012. The stock currently trades at 13 times the 2011 consensus earnings estimate, not dirt cheap but reasonable for a stock showing good growth. The issue provides the added kicker as a “gold play.” The stock doesn’t pay much in the way of a dividend yield but these shares should put up decent capital gains over the next 12-24 months.
News for Payday Loan Investors, Lenders and Borrowers
August 5th, 2011
Cash America: A good deal!
With traditional credit remaining tight, the pawn shop operators are filling the void. Cash America International Inc. (CSH – Snapshot Report) recently raised fiscal 2011 earnings guidance after it surprised on the second quarter Zacks Consensus Estimate. This strong buy is also an attractive value stock, with a forward P/E of 12.7.
Financial Services Provider
Cash America provides financial services at 782 locations in 23 states under the names Cash America Pawn, SuperPawn, Maxit, Pawn X-Change, Cash America Payday Advance and Cashland. It is also a majority owner in 184 pawn shops in 21 jurisdictions in central and southern Mexico under the name Prenda Facil. The company offers consumer loans over the Internet in 30 states, the United Kingdom, Canada and Australia.
Second quarter results
Cash America Beat forecasts by 14.1% in the Second Quarter. On July 21, Cash America reported its second quarter results and surprised on the Zacks Consensus by 11 cents. Earnings per share were 89 cents compared to the estimate of 79 cents. The company made just 70 cents in the year ago period. Revenue rose 14% to $334.3 million from $292.1 million in the second quarter of 2010 due to a 15% increase in pawn loan fees and service charges and a 14% increase in merchandise sales. Merchandise sales saw higher gross profit margins, which led to an 18% increase in profit from the disposition of merchandise. Consumer loan fees rose 14% to $132.4 million compared to the prior quarter. The company saw lower losses on consumer loans in the quarter.
Raised Guidance
Given the better-than-expected quarter, and the higher than originally expected balances of lending assets, Cash America raised its full year earnings guidance to a range of $4.28 to $4.48 per share from its April guidance of $4.16 to $4.30.
2011 Zacks Consensus Estimates Rise
Since the earnings report, 7 estimates for fiscal 2011 moved higher pushing the Zacks Consensus up to $4.41 from $4.26 per share. This is earnings growth of 15.1%.
Pawnshops Rushing In Where Banks Fear To Tread
July 16th, 2011
Everything is good for someone…
The June jobless rate hovering just under 10 % wasn’t bad news for all businesses.
Take the pawn industry for instance. The recovery stalls, no jobs to be had, pensions down the drain and pawn customers are expected to continue streaming in with their gold jewelry, DVRs and other personal items to pledge or sell in exchange for cash.
Tighter lending standards and rising gold prices help drive business to pawnshop owners like Adam Bohlman, in Duluth, Minn.
Tighter lending policies
Tighter lending policies by banks and a squeeze on subprime customers by credit card companies amplify the effect, forcing beleaguered consumers to pawnshops and other alternatives such as payday lenders. To this mixture add high energy costs, high food costs and anything else that puts pressure on disposable income. Those are all the ingredients necessary to create the need for more borrowing,” said analyst David Burtzlaff of Stephens Inc.
Who’s benefiting?
The large, publicly traded pawn chains Cash America (CSH), First Cash Financial (FCFS) and EZCorp (EZPW) are benefiting. They are also offering high-interest, short-term payday loans, although that’s a shrinking part of their business. Why? Not only do you need a paycheck to qualify, but states have been pressuring payday lenders with profit-wilting regulations. That’s not the case with pawn stores. And you don’t need a job to get a loan. You just need stuff you can live without.
Hocking your goods
Borrowers hock their goods with a pawnbroker in return for cash. If they can pay back the loan, with interest, before the time agreement expires, they get their item back. If not, the pawnshop sells the collateral. Pawnshops are seeing a wealth of sales, offering what First Cash Chief Executive Rick Wessel calls “deep value” pricing. “In today’s economy, customers are looking for a bargain,” he said. Same-store sales across First Cash’s more than 200 shops in the U.S. jumped 15% in the first quarter vs. a year earlier, a high watermark, Wessel says. “We were typically in the mid to high-single digits until a year or two ago,” he said. In Mexico, where First Cash and other major U.S. pawn operators are working to consolidate a competitive market, sales are growing even faster.
Consumer Loans
IBD’s Finance-Consumer Loans group held firm among IBD’s 20 strongest industries during the past quarter. The largest company in the group, measured by market capitalization, is Capital One Financial (COF). Originally a consolidator in the subprime lending arena, it is rapidly becoming a more diversified financial services firm. Though Capital One is less active in subprime consumer loans than it used to be, “it’s finding a unique opportunity in the upper end of that subprime universe,” said John Stilmar, an analyst with SunTrust Robinson Humphrey.
Pawn Shop and Payday Loan Stocks Are Looking Good
July 9th, 2011
The jobless aren’t finding work and companies are profiting from their bad fortune
Investors looking for good stocks may want to follow the lending money as the jobless rate inches up and the economic recovery sputters.
Ezcorp Inc
Profits at pawn shop operator Ezcorp Inc. have jumped by an average 46 percent annually for five years. The stock has doubled from a year ago, to about $38. And the Wall Street pros who analyze the company think it will go higher yet. All seven of them are telling investors to buy the Texas, company. Is the economy in a soft patch or a hard patch? Will the market rise or drop? In investing, it’s often better to focus on what you can safely predict, even if that safety is found in companies that thrive on hard times.
Payday lender
Stock in payday lender Advance America Cash Advance Centers has doubled from a year ago, to just under $8. Rival Cash America International Inc. is up 64 percent, to $58. Such firms typically provide high interest payday loans to people who can’t borrow from traditional lenders.
Others
Profits at Encore Capital Group, a debt collector that targets people with unpaid credit cards bills and other debts, is up 59 percent from a year ago, to more than $30. Stock in Rent-A-Center, which leases televisions, couches, computers and more, is up 57 percent from a year ago to nearly $32. Nine of the 11 analysts covering the company say it will rise further and that investors should buy it.
Unpalatable but profitable
The idea of investing in companies catering to the hard-up might not be palatable to some people. But it is profitable. Mark Montagna, an analyst at Avondale Partners in Nashville, has developed what he calls “value retail” index of 11 companies, dollar stores, off-price shops and clothing and footwear chains favored by shoppers looking for deals. The index is up 149 percent since February 2009, which marked the lowest month-end closing value for the S&P 500 during the recession.
Desperation stocks
Desperation stocks continue to be lifted by bad news. Consumer spending, adjusted for inflation, has fallen for two months in a row, the first back-to-back fall since November 2009. On Friday, the government reported the unemployment rate rose to 9.2 percent in June, sending stocks into a tailspin. On top of that, one in seven Americans now live below the poverty line, a 17-year high.
A good year
“It’s been a good year,” says John Coffey Jr., a Sterne Agee analyst, referring to the companies he follows, not the economy. Coffey created a stir late last month when he issued a report arguing shares of Ezcorp, which also makes payday loans, were worth a third more than their price and urged investors to buy. The stock rose 7 percent in just a few hours. The next day a widely followed survey showed consumer confidence at a seven month low.
Recovery and confidence
“Here we are celebrating the second year of recovery and confidence is at levels consistent with a recession,” says David Rosenberg, an economist at money manager Gluskin Sheff. “The folks in the survey are probably not the same folks shopping at Tiffany’s.” That company’s stock is also up nearly 50 percent since March, to about $82.
Still shopping
They are probably shopping at Dollar General Corp. Stock in the discount retailer recently hit $34.13, up 50 percent from its IPO in late 2009. And it may be worth about a third more, at least according Avondale’s Montagna. “People are broke. They’re all chasing value. It’s a seismic shift in mindset,” he says.
Down-and-out stocks
Some experts think these down-and-out stocks are just as likely to fall now instead of rise. It’s not that they think the recovery will turn brisk and people will get jobs and shop elsewhere. It’s that things could get worse, making customers too poor to borrow or buy even from these outfits. Rent-A-Center, the furniture store, is already suffering. Some of its core low-income shoppers have seen money they would have spent leasing a couch or cocktail table eaten up by rising food and fuel bills.
Renting furniture
But not to despair. According to Nick Mitchell, an analyst at Northcoast Research, wealthier customers, say those making $45,000, are feeling so strapped lately that they’re starting to rent furniture, too. Montagna, the Dollar General bull, says he’s seeing people earning $70,000 or more at that chain, too. Even he shops there now.
“If I’m driving past one, I stop in,” he says, adding triumphantly, “I just bought toothpaste. Crest, two tubes for $4.”
Archives
Categories