Digital Engagement And Latin America Expansion Will Transform Pawn Lending

Key Takeaways

• Persistent economic pressures and secular labor shifts are structurally expanding demand for pawn services, driving growth in customer base, revenue, and long-term profitability.
  
• Digital innovations, operational efficiencies, and continued Latin American expansion enhance customer acquisition, margin leverage, and geographic diversification.
  
• Heavy reliance on gold prices, store expansion, and early-stage digital initiatives creates risks to margins, growth, and shareholder returns amid evolving regulation and industry competition.

Catalysts

Provides pawn services in the United States and Latin America.

• Sustained demand for short-term, collateral-based lending driven by persistent inflation, tighter access to mainstream credit, and growing economic inequality continues to increase EZCORP's customer base, supporting double-digit year-over-year growth in Pawn Loans Outstanding (PLO), fee income, and store-level revenue.
  
• Growing investments in digital engagement-such as EZ+ Rewards, online payment and layaway options, view-online-purchase-in-store, and Instant Quote-are expanding channels for customer acquisition and enabling more efficient customer servicing, likely strengthening repeat business and boosting overall revenue growth and margin leverage.
  
• Ongoing and accelerated store footprint expansion, particularly in large underserved markets across Latin America (e.g., recent acquisitions in Mexico and new de novo stores in Guatemala and El Salvador), diversifies geographic risk and significantly increases addressable market size, positioning the company for outsized topline and EBITDA growth.
  
• Enhanced operational efficiency through best practice adoption, advanced pricing and inventory systems, and disciplined cost management is generating recurring operating leverage, as evidenced by multi-quarter EBITDA margin expansion, improving net margins and driving outsized earnings growth relative to revenue.
  
• Secular shifts such as increased gig and informal economy work (leading to more consumers with irregular incomes) and limited banking access in Latin America are structurally broadening the pool of underbanked customers who rely on pawn services, reinforcing long-term, multiyear growth in loan originations, fee revenue, and store-level profitability.

EZCORP Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming EZCORP's revenue will grow by 6.8% annually over the next 3 years.
• Analysts assume that profit margins will increase from 8.0% today to 9.2% in 3 years time.
• Analysts expect earnings to reach $137.5 million (and earnings per share of $1.76) by about August 2028, up from $98.1 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $122.6 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 15.0x on those 2028 earnings, up from 9.5x today. This future PE is greater than the current PE for the US Consumer Finance industry at 9.3x.
• Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 9.79%, as per the Simply Wall St company report.

EZCORP Future Earnings Per Share Growth

Risks

• The company's reliance on rising gold prices and high jewelry volume (which currently represent the majority of PLO and inventory) means that a stabilization or drop in gold prices could reduce merchandise margins and scrap revenue, directly impacting EBITDA growth and earnings.
  
• Digitization efforts, while promising, are still in an early phase, especially in Latin America, exposing EZCORP to the risk that slow technology adoption or poor integration leaves it behind faster-moving fintech competitors and negatively affects long-term revenue and customer retention.
  
• High dependence on physical retail expansion (store count growth and acquisitions) exposes the company to elevated real estate, labor, and integration costs; if store performance or economic conditions falter, this could compress net margins and limit overall earnings growth.
  
• Sustained margin expansion and revenue growth are currently supported by favorable market environments (like inflation-driven pawn demand); long-term industry risks include increased regulatory scrutiny on non-bank lending, caps on fees/interest, or societal backlash against high-cost lending, all of which could structurally compress profitability.
  
• Continued prioritization of scale and acquisitions over share buybacks or dividends-despite investor interest-means returns to shareholders are contingent on successful, high-return capital deployment; any missteps in acquisitions or an overestimation of secular demand could reduce earnings and suppress the share price.

Valuation

• The analysts have a consensus price target of $21.0 for EZCORP based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $25.0, and the most bearish reporting a price target of just $17.0.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $1.5 billion, earnings will come to $137.5 million, and it would be trading on a PE ratio of 15.0x, assuming you use a discount rate of 9.8%.
  
• Given the current share price of $15.36, the analyst price target of $21.0 is 26.9% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.