NEW YORK (TheStreet) -- Ezcorp (EZPW) was soaring 22.25% to $11.43 shortly after noon on Wednesday after the pawn shop operator announced first-quarter earnings per share that exceeded analysts' expectations.
The company reported adjusted earnings of 49 cents per share in the quarter that ended Dec. 31, which surpassed analysts' expectations of 39 cents a share. Ezcorp also reported revenue dropped 1% to $269.4 million from $272.7 million in the same period one year earlier, though this still beat analysts' expectations of $257.5 million.
Furthermore, the company noted that sales in stores open at least one year rose 8% compared to the same quarter one year ago.
TheStreet Ratings team rates EZCORP INC as a "hold" with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate EZCORP INC (EZPW) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- EZPW's debt-to-equity ratio is very low at 0.27 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, EZPW has a quick ratio of 2.42, which demonstrates the ability of the company to cover short-term liquidity needs.
- The gross profit margin for EZCORP INC is currently very high, coming in at 70.54%. 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 -10.55% is in-line with the industry average.
- Net operating cash flow has decreased to $27.06 million or 41.57% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. In comparison to the other companies in the Consumer Finance industry and the overall market, EZCORP INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- You can view the full analysis from the report here: EZPW Ratings Report