EZCORP (EZPW) can turn the corner, the stock has excellent upside potential. EZPW is down mainly because scrap gold prices are low, so the company isn’t profiting off people’s pawned gold jewelry like it used to. I used to own EZPW, and would love to get back in because I feel this stock has the long-term potential to go from $10 to $40.
One Year Chart
EZPW jumped a bit after posting earnings last quarter. But when we look into the numbers, we see profit growth was down 34% and Estimates show more negative growth coming. These figures also got reduced, but only by 2-3 cents, much less than the 19-20 cents they fell by last quarter.
Notice this stock used to be $23 a year ago. I think once gold prices stabilize the company can get back to making $2 in profits. In 2011 the stock was 35 and selling for 14x what it would earn that year. If EZPW makes $2 and gets a 14 P/E again, the stock would be $34 — triple the current price.
Fair Value
I feel this stock will soon be on its way back to $20. I am hoping the Earnings Table starts to show some green soon. If it does, that may be my buy signal.
Sharek’s Take
EZ CORP used to be one of the stock market’s leading stocks. It grew profits ten-fold between 2004 and 2012. The stock price almost matched that. I keep a close eye on EZPW and should probably buy some and not look at it for a while. Around $10 now, I feel EZPW can get to $20 next year and $30 to $40 in the years beyond.
View the Earnings Table here. View the Profit History here.View the Ten Year Chart here.
