NEW YORK (
-- Advance America Cash Advance Centers
) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels, expanding profit margins and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.
Highlights from the ratings report include:
- ADVANCE AMER CASH ADVANCE CT has improved earnings per share by 31.8% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ADVANCE AMER CASH ADVANCE CT reported lower earnings of $0.58 versus $0.88 in the prior year. This year, the market expects an improvement in earnings ($0.94 versus $0.58).
- 35.00% is the gross profit margin for ADVANCE AMER CASH ADVANCE CT which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 12.50% trails the industry average.
- AEA's debt-to-equity ratio is very low at 0.28 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 4.18, which clearly demonstrates the ability to cover short-term cash needs.
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
Advance America, Cash Advance Centers, Inc. provides cash advance services in the United States, the United Kingdom, and Canada. The company offers cash advance services, which include cash advances, installment loans, and lines of credit. The company has a P/E ratio of nine, equal to the average financial services industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Advance America Cash Advance Centers has a market cap of $365.8 million and is part of the
industry. Shares are up 1.8% year to date as of the close of trading on Wednesday.
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