<!-- HTML_TAG_START -->NasdaqGS:FCFS Earnings Per Share Growth December 29th 2024<!-- HTML_TAG_END -->
FirstCash Holdings, Inc. (NASDAQ:FCFS) shareholders might be concerned after seeing the share price drop 10% in the last quarter. But that doesn’t change the fact that the returns over the last three years have been pleasing. After all, the share price is up a market-beating 38% in that time.
So let’s investigate and see if the longer term performance of the company has been in line with the underlying business’ progress.
View our latest analysis for FirstCash Holdings
While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
FirstCash Holdings was able to grow its EPS at 20% per year over three years, sending the share price higher. The average annual share price increase of 11% is actually lower than the EPS growth. So it seems investors have become more cautious about the company, over time.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here.
It is important to consider the total shareholder return, as well as the share price return, for any given stock. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for FirstCash Holdings the TSR over the last 3 years was 44%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!
Investors in FirstCash Holdings had a tough year, with a total loss of 3.7% (including dividends), against a market gain of about 26%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer term investors wouldn’t be so upset, since they would have made 6%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For instance, we’ve identified 1 warning sign for FirstCash Holdings that you should be aware of.
