EZPW - EZCorp

[Philip Morris IV]

For anyone interested, I spoke with FCFS IR.

 

They have successfully lobbied for essential business status across the vast majority of their markets, so their stores remain open and business as usual.  They do not plan to release any business update prior to earnings on 4/22, so no current comment on PLO and merchandising trends of the past few weeks.

 

If there were a time for the counter-cyclical features of this business to shine, it should be now.  They are providing liquidity and secured credit to the un- and under-banked that are most under pressure.  My concern that they are put an excess of forfeited collateral does not phase them.  Merchandise should exhibit something of a "dollar store effect" as consumers shop down from traditional retail, and they have the pricing power to quickly adjust LTVs to uphold margin in such a situation.  I won't attempt to guide the MXN peso or their sensitivity to it.

 

Anecdotally from private conversations, the pawn industry has somewhat struggled for growth in the last few years as the consumer and financial economy had been so strong.  Recent social welfare programs in Mexico didn't help either.  This would suggest earnings were somewhat constrained and may likely be no longer.

 

I know this is the EZPW thread, but just in case anyone is familiar with pawn from looking at EZPW, understand/like the industry, and are willing to pay up for quality, you may find this FCFS info useful.  The overall quality of the business, their financials, governance and disclosures is totally night and day - and the valuation reflects it.