EZCORP’s common shares will need to reach $18 to achieve average annual stock market performance of 9.0% over the next 6 years. EZCORP’s stock price will need to reach $21 by 2029 to achieve upper quartile performance. At the current price of $11, what is the market’s view of EZCORP’s future operating performance?
Executive Summary
- Price Target Research identifies EZCORP as having: above average expected growth, average profitability, instability, and low financial strength. A big positive influence on EZCORP’s valuation is its superior Growth.
- Very low valuation, above market shareholder returns. Current valuation levels are very low relative to the EZCORP Peer Group. Recent market returns have outperformed the EZCORP Peer Group. Total shareholder returns expected to significantly beat the overall equity market. Based on current investor expectations, EZCORP shares should reach a level of $32 by 2029 — an 20.1% per year total shareholder return. A 2029 stock price of $18 would reflect median performance and a price of $21 would be required to reach upper quartile performance.
- Historical growth has been very high relative to the EZCORP Peer Group and forecasted growth is relatively high. EZCORP’s historical income statement growth and balance sheet growth have diverged. Revenue growth has paralleled asset growth; earnings growth has exceeded equity growth resulting in an improving return on equity.
- Profitability is only average. The company has below average cash and will have to work to generate attractive investment opportunities and improve valuation.
- EZCORP’s risk profile is unfavorable. Overall variability has been only average with only average revenue variability, very high E.P.S. variability, and only average stock price volatility. Financial Strength is below average and earnings’ expectations are relatively very high. The debt/capital ratio has risen.
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