FirstCash Holdings (FCFS): Examining Valuation Following Strong Earnings and Upbeat 2025 Outlook

FirstCash Holdings (FCFS) has reported higher revenue and net income for the third quarter and year to date, reflecting solid business performance. The company also reaffirmed its upbeat outlook for 2025, citing continued asset and store growth.

See our latest analysis for FirstCash Holdings.

Recent months have brought a steady stream of positive news for FirstCash Holdings, including solid quarterly earnings, an expanded share repurchase program, and a maintained dividend. These actions, combined with management's confident 2025 guidance, have resonated with investors. The stock's share price has climbed 56.7% this year, while its one-year total shareholder return sits at an impressive 49.2%, reflecting strong momentum and growing optimism around its long-term growth story.

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With shares climbing nearly 57% year-to-date and bullish guidance from management, investors now face a key question: Is FirstCash Holdings still undervalued, or has the recent rally already priced in future growth?

Price-to-Earnings of 22.9x: Is it justified?

FirstCash Holdings trades at a price-to-earnings (P/E) ratio of 22.9x, notably above the average for its Consumer Finance peers and its estimated fair value. At a last close of $160.73, this high multiple signals that the market may be pricing in substantial future growth or resilience.

The P/E ratio measures how much investors are willing to pay for each dollar of earnings. For a company like FirstCash in the diversified financials sector, it can indicate optimism about future profit expansion or premium business quality. However, a lofty P/E can also mean high expectations that leave little room for disappointment.

Compared to the industry average P/E of 10.3x, FirstCash's valuation appears stretched. Its fair P/E ratio is estimated at 15.3x, which is significantly lower than where shares are trading now. The current valuation leaves less margin for error if future results do not exceed expectations.

Explore the SWS fair ratio for FirstCash Holdings

Result: Price-to-Earnings of 22.9x (OVERVALUED)

However, downside risks remain, including a potential slowdown in annual revenue growth or unexpected volatility in net income. These factors could pressure the current valuation.

Find out about the key risks to this FirstCash Holdings narrative.

Another View: What Does the SWS DCF Model Say?

While the price-to-earnings approach suggests FirstCash Holdings is richly valued, our DCF model indicates an even starker picture. According to our analysis, the current share price of $160.73 is well above the estimated fair value of $73.56. This points to notable overvaluation if future cash flows do not accelerate sharply.

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out FirstCash Holdings for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 874 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own FirstCash Holdings Narrative

If you’d like to dig deeper into the numbers or challenge these findings, you can build your own view in just a few minutes using Do it your way.

A great starting point for your FirstCash Holdings research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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