FirstCash Holdings, Inc. (NASDAQ:FCFS) Just Reported First-Quarter Earnings: Have Analysts Changed Their Mind On The Stock?

It's been a sad week for FirstCash Holdings, Inc. (NASDAQ:FCFS), who've watched their investment drop 13% to US$115 in the week since the company reported its quarterly result. It was a credible result overall, with revenues of US$836m and statutory earnings per share of US$1.35 both in line with analyst estimates, showing that FirstCash Holdings is executing in line with expectations. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for FirstCash Holdings

Following the latest results, FirstCash Holdings' four analysts are now forecasting revenues of US$3.44b in 2024. This would be a modest 6.8% improvement in revenue compared to the last 12 months. Per-share earnings are expected to swell 16% to US$5.93. In the lead-up to this report, the analysts had been modelling revenues of US$3.50b and earnings per share (EPS) of US$6.12 in 2024. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at US$139, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic FirstCash Holdings analyst has a price target of US$150 per share, while the most pessimistic values it at US$125. This is a very narrow spread of estimates, implying either that FirstCash Holdings is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that FirstCash Holdings' revenue growth is expected to slow, with the forecast 9.2% annualised growth rate until the end of 2024 being well below the historical 14% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 12% per year. Factoring in the forecast slowdown in growth, it seems obvious that FirstCash Holdings is also expected to grow slower than other industry participants.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for FirstCash Holdings. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that FirstCash Holdings' revenue is expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on FirstCash Holdings. Long-term earnings power is much more important than next year's profits. We have forecasts for FirstCash Holdings going out to 2025, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 2 warning signs for FirstCash Holdings that you should be aware of.

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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.