Cash America raises full-year earnings outlook
July 29, 2008
FORT WORTH, Texas - Pawnshop operator and cash advance provider Cash America International Inc. on Thursday raised its full-year earnings guidance based on strong results for the first half of the year and expectations for continued demand for its loan products.
The company now expects a profit of between $3 and $3.20 per share, up from a prior estimate of $2.85 to $3 per share. Analysts polled by Thomson Financial, on average, forecast earnings of $3.08 per share. Cash America earned $2.48 per share in fiscal 2007.
The guidance assumes that the company will close its cash advance locations in Ohio during the third quarter, but does not include one-time charges for any store closures.
The planned closings in Ohio are a result of a new state law there that caps payday loan interest at 28 percent, a level that prevents the company from offering the cash advance product profitably.
Cash America is reviewing ways it might continue to serve customers in need of short-term loans in Ohio.
Payday loans are short-term, unsecured loans offered to cash-strapped consumers that typically mature in two weeks or on the borrower's next payday. The loans are often priced at a fixed-dollar fee, but the underlying annual interest rate is usually near 400 percent or more.
The company also said it expects third-quarter earnings per share of between 62 cents and 66 cents. Analysts expect earnings of 64 cents per share. The guidance excludes one-time charges related to store closures in Ohio. Cash America earned 55 cents per share in the third quarter of last year.
Despite the improved guidance, its shares fell $2.05, or 4.7 percent, to $41.29 in morning trading. Shares have traded between $26.17 and $48.86 in the past 12 months.
Source : http://www.forbes.com
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