Intrinsic value of FirstCash, Inc. - FCFS

Previous Close

$100.26

  Intrinsic Value

$42.95

stock screener

  Rating & Target

str. sell

-57%

Previous close

$100.26

 
Intrinsic value

$42.95

 
Up/down potential

-57%

 
Rating

str. sell

Our model is not good at valuating stocks of financial companies, such as FCFS.

We calculate the intrinsic value of FCFS stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 4.4

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  1,817
  1,858
  1,906
  1,960
  2,019
  2,084
  2,155
  2,232
  2,315
  2,404
  2,499
  2,600
  2,708
  2,823
  2,945
  3,074
  3,210
  3,355
  3,508
  3,669
  3,839
  4,018
  4,207
  4,406
  4,616
  4,837
  5,069
  5,314
  5,571
  5,842
Variable operating expenses, $m
  1,604
  1,640
  1,681
  1,728
  1,780
  1,836
  1,898
  1,965
  2,037
  2,114
  2,171
  2,259
  2,353
  2,453
  2,559
  2,671
  2,789
  2,915
  3,048
  3,188
  3,335
  3,491
  3,655
  3,828
  4,011
  4,203
  4,405
  4,617
  4,841
  5,076
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  1,604
  1,640
  1,681
  1,728
  1,780
  1,836
  1,898
  1,965
  2,037
  2,114
  2,171
  2,259
  2,353
  2,453
  2,559
  2,671
  2,789
  2,915
  3,048
  3,188
  3,335
  3,491
  3,655
  3,828
  4,011
  4,203
  4,405
  4,617
  4,841
  5,076
Operating income, $m
  213
  219
  225
  232
  240
  248
  257
  268
  278
  290
  328
  341
  355
  370
  386
  403
  421
  440
  460
  481
  503
  527
  552
  578
  605
  634
  665
  697
  731
  766
EBITDA, $m
  264
  271
  278
  285
  294
  303
  314
  325
  337
  350
  364
  379
  394
  411
  429
  448
  467
  488
  511
  534
  559
  585
  613
  642
  672
  704
  738
  774
  811
  851
Interest expense (income), $m
  19
  35
  36
  37
  38
  40
  41
  43
  45
  47
  49
  51
  54
  56
  59
  62
  65
  69
  72
  76
  80
  84
  89
  93
  98
  103
  109
  115
  121
  127
  134
Earnings before tax, $m
  178
  183
  188
  194
  200
  207
  215
  223
  232
  241
  277
  287
  299
  311
  324
  338
  352
  368
  384
  401
  419
  438
  458
  480
  502
  525
  550
  576
  603
  632
Tax expense, $m
  48
  49
  51
  52
  54
  56
  58
  60
  63
  65
  75
  78
  81
  84
  88
  91
  95
  99
  104
  108
  113
  118
  124
  129
  136
  142
  149
  156
  163
  171
Net income, $m
  130
  133
  137
  141
  146
  151
  157
  163
  169
  176
  202
  210
  218
  227
  237
  247
  257
  268
  280
  293
  306
  320
  335
  350
  366
  384
  402
  421
  441
  462

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  1,826
  1,868
  1,916
  1,970
  2,029
  2,095
  2,166
  2,243
  2,327
  2,416
  2,511
  2,613
  2,722
  2,837
  2,960
  3,089
  3,227
  3,372
  3,525
  3,687
  3,858
  4,038
  4,228
  4,429
  4,639
  4,861
  5,095
  5,341
  5,599
  5,872
Adjusted assets (=assets-cash), $m
  1,826
  1,868
  1,916
  1,970
  2,029
  2,095
  2,166
  2,243
  2,327
  2,416
  2,511
  2,613
  2,722
  2,837
  2,960
  3,089
  3,227
  3,372
  3,525
  3,687
  3,858
  4,038
  4,228
  4,429
  4,639
  4,861
  5,095
  5,341
  5,599
  5,872
Revenue / Adjusted assets
  0.995
  0.995
  0.995
  0.995
  0.995
  0.995
  0.995
  0.995
  0.995
  0.995
  0.995
  0.995
  0.995
  0.995
  0.995
  0.995
  0.995
  0.995
  0.995
  0.995
  0.995
  0.995
  0.995
  0.995
  0.995
  0.995
  0.995
  0.995
  0.995
  0.995
Average production assets, $m
  738
  755
  774
  796
  820
  846
  875
  906
  940
  976
  1,015
  1,056
  1,100
  1,146
  1,196
  1,248
  1,303
  1,362
  1,424
  1,490
  1,559
  1,631
  1,708
  1,789
  1,874
  1,964
  2,058
  2,158
  2,262
  2,372
Working capital, $m
  211
  216
  221
  227
  234
  242
  250
  259
  269
  279
  290
  302
  314
  327
  342
  357
  372
  389
  407
  426
  445
  466
  488
  511
  535
  561
  588
  616
  646
  678
Total debt, $m
  606
  625
  646
  670
  696
  725
  756
  790
  827
  866
  909
  954
  1,001
  1,052
  1,106
  1,163
  1,224
  1,288
  1,356
  1,427
  1,502
  1,582
  1,666
  1,754
  1,847
  1,945
  2,048
  2,156
  2,270
  2,390
Total liabilities, $m
  805
  824
  845
  869
  895
  924
  955
  989
  1,026
  1,065
  1,108
  1,153
  1,200
  1,251
  1,305
  1,362
  1,423
  1,487
  1,555
  1,626
  1,701
  1,781
  1,865
  1,953
  2,046
  2,144
  2,247
  2,355
  2,469
  2,589
Total equity, $m
  1,021
  1,044
  1,071
  1,101
  1,134
  1,171
  1,211
  1,254
  1,301
  1,351
  1,404
  1,461
  1,522
  1,586
  1,654
  1,727
  1,804
  1,885
  1,971
  2,061
  2,157
  2,257
  2,364
  2,476
  2,593
  2,717
  2,848
  2,986
  3,130
  3,282
Total liabilities and equity, $m
  1,826
  1,868
  1,916
  1,970
  2,029
  2,095
  2,166
  2,243
  2,327
  2,416
  2,512
  2,614
  2,722
  2,837
  2,959
  3,089
  3,227
  3,372
  3,526
  3,687
  3,858
  4,038
  4,229
  4,429
  4,639
  4,861
  5,095
  5,341
  5,599
  5,871
Debt-to-equity ratio
  0.590
  0.600
  0.600
  0.610
  0.610
  0.620
  0.620
  0.630
  0.640
  0.640
  0.650
  0.650
  0.660
  0.660
  0.670
  0.670
  0.680
  0.680
  0.690
  0.690
  0.700
  0.700
  0.700
  0.710
  0.710
  0.720
  0.720
  0.720
  0.730
  0.730
Adjusted equity ratio
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559
  0.559

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  130
  133
  137
  141
  146
  151
  157
  163
  169
  176
  202
  210
  218
  227
  237
  247
  257
  268
  280
  293
  306
  320
  335
  350
  366
  384
  402
  421
  441
  462
Depreciation, amort., depletion, $m
  51
  52
  53
  54
  54
  55
  56
  57
  59
  60
  36
  38
  39
  41
  43
  44
  46
  48
  51
  53
  55
  58
  61
  64
  67
  70
  73
  77
  80
  84
Funds from operations, $m
  182
  185
  190
  195
  200
  207
  213
  220
  228
  236
  238
  247
  257
  268
  279
  291
  304
  317
  331
  346
  362
  378
  395
  414
  433
  453
  475
  497
  521
  546
Change in working capital, $m
  4
  5
  6
  6
  7
  8
  8
  9
  10
  10
  11
  12
  13
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
  28
  30
  31
Cash from operations, $m
  177
  181
  184
  189
  194
  199
  205
  211
  218
  226
  227
  236
  245
  255
  265
  276
  288
  300
  313
  327
  342
  357
  374
  391
  409
  428
  448
  469
  491
  515
Maintenance CAPEX, $m
  -26
  -26
  -27
  -28
  -28
  -29
  -30
  -31
  -32
  -33
  -35
  -36
  -38
  -39
  -41
  -43
  -44
  -46
  -48
  -51
  -53
  -55
  -58
  -61
  -64
  -67
  -70
  -73
  -77
  -80
New CAPEX, $m
  -14
  -17
  -19
  -22
  -24
  -26
  -29
  -31
  -34
  -36
  -39
  -41
  -44
  -47
  -49
  -52
  -55
  -59
  -62
  -65
  -69
  -73
  -77
  -81
  -85
  -90
  -94
  -99
  -104
  -110
Cash from investing activities, $m
  -40
  -43
  -46
  -50
  -52
  -55
  -59
  -62
  -66
  -69
  -74
  -77
  -82
  -86
  -90
  -95
  -99
  -105
  -110
  -116
  -122
  -128
  -135
  -142
  -149
  -157
  -164
  -172
  -181
  -190
Free cash flow, $m
  138
  137
  138
  139
  141
  143
  146
  149
  152
  156
  154
  158
  163
  169
  175
  181
  188
  195
  203
  211
  220
  229
  239
  249
  260
  271
  284
  296
  310
  324
Issuance/(repayment) of debt, $m
  15
  19
  21
  24
  26
  29
  31
  34
  37
  39
  42
  45
  48
  51
  54
  57
  61
  64
  68
  71
  75
  79
  84
  88
  93
  98
  103
  108
  114
  120
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  15
  19
  21
  24
  26
  29
  31
  34
  37
  39
  42
  45
  48
  51
  54
  57
  61
  64
  68
  71
  75
  79
  84
  88
  93
  98
  103
  108
  114
  120
Total cash flow (excl. dividends), $m
  153
  156
  159
  163
  167
  172
  177
  183
  189
  196
  196
  203
  211
  220
  229
  238
  248
  259
  271
  282
  295
  308
  322
  337
  353
  369
  387
  405
  424
  444
Retained Cash Flow (-), $m
  -20
  -23
  -27
  -30
  -33
  -37
  -40
  -43
  -47
  -50
  -53
  -57
  -61
  -64
  -68
  -73
  -77
  -81
  -86
  -91
  -96
  -101
  -106
  -112
  -118
  -124
  -131
  -137
  -145
  -152
Prev. year cash balance distribution, $m
  318
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  451
  132
  132
  133
  134
  136
  137
  140
  143
  146
  142
  146
  151
  155
  160
  166
  172
  178
  185
  192
  200
  208
  216
  225
  235
  245
  256
  267
  279
  292
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  432
  121
  115
  110
  104
  98
  93
  87
  82
  76
  68
  62
  57
  52
  47
  42
  37
  33
  28
  24
  21
  17
  14
  11
  9
  7
  5
  4
  3
  2
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

FirstCash, Inc., formerly First Cash Financial Services, Inc., is an operator of retail-based pawn stores in the United States and Latin America. The Company's primary business is the operation of full-service pawn stores, which make small pawn loans secured by personal property, such as consumer electronics, jewelry, power tools, household appliances, sporting goods and musical instruments. The Company's operates through two segments: the U.S. operations segment and the Latin America operations segment. The U.S. operations segment consists of all pawn and consumer loan operations in the United States and the Latin America operations segment consists of all pawn and consumer loan operations in Latin America, which includes operations in Mexico, Guatemala and El Salvador. In addition, some of the Company's pawn stores offer small unsecured consumer loans or credit services products. The Company also operates consumer finance stores in Texas and Mexico.

FINANCIAL RATIOS  of  FirstCash, Inc. (FCFS)

Valuation Ratios
P/E Ratio 81.1
Price to Sales 4.5
Price to Book 3.4
Price to Tangible Book
Price to Cash Flow 50.1
Price to Free Cash Flow 77.2
Growth Rates
Sales Growth Rate 54.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 61.9%
Cap. Spend. - 3 Yr. Gr. Rate 4.7%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 31.5%
Total Debt to Equity 31.5%
Interest Coverage 6
Management Effectiveness
Return On Assets 5%
Ret/ On Assets - 3 Yr. Avg. 9.4%
Return On Total Capital 4.6%
Ret/ On T. Cap. - 3 Yr. Avg. 9.1%
Return On Equity 6.4%
Return On Equity - 3 Yr. Avg. 13.5%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 55.6%
Gross Margin - 3 Yr. Avg. 55.8%
EBITDA Margin 13.2%
EBITDA Margin - 3 Yr. Avg. 16.9%
Operating Margin 10.2%
Oper. Margin - 3 Yr. Avg. 14.3%
Pre-Tax Margin 8.5%
Pre-Tax Margin - 3 Yr. Avg. 12.5%
Net Profit Margin 5.5%
Net Profit Margin - 3 Yr. Avg. 8.7%
Effective Tax Rate 35.5%
Eff/ Tax Rate - 3 Yr. Avg. 31.2%
Payout Ratio 33.3%

FCFS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the FCFS stock intrinsic value calculation we used $1781 million for the last fiscal year's total revenue generated by FirstCash, Inc.. The default revenue input number comes from 0001 income statement of FirstCash, Inc.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our FCFS stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for FCFS is calculated based on our internal credit rating of FirstCash, Inc., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of FirstCash, Inc..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of FCFS stock the variable cost ratio is equal to 88.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for FCFS stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.9% for FirstCash, Inc..

Corporate tax rate of 27% is the nominal tax rate for FirstCash, Inc.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the FCFS stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for FCFS are equal to 40.6%.

Life of production assets of 28.1 years is the average useful life of capital assets used in FirstCash, Inc. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for FCFS is equal to 11.6%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $1318.104 million for FirstCash, Inc. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 43.539 million for FirstCash, Inc. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of FirstCash, Inc. at the current share price and the inputted number of shares is $4.4 billion.

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