Regional Management (RM) & First Cash (FCFS) Critical Comparison

Regional Management (NYSE: RM) and First Cash (NYSE:FCFS) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, earnings, dividends, profitability, risk, institutional ownership and analyst recommendations.

Institutional and Insider Ownership

86.4% of Regional Management shares are owned by institutional investors. Comparatively, 95.7% of First Cash shares are owned by institutional investors. 9.5% of Regional Management shares are owned by insiders. Comparatively, 2.8% of First Cash shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Dividends

First Cash pays an annual dividend of $0.80 per share and has a dividend yield of 1.2%. Regional Management does not pay a dividend. First Cash pays out 34.3% of its earnings in the form of a dividend.

Profitability

This table compares Regional Management and First Cash’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Regional Management 9.66% 12.62% 3.78%
First Cash 6.41% 8.45% 5.91%

Valuation and Earnings

This table compares Regional Management and First Cash’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Regional Management $240.52 million 1.15 $24.03 million $2.17 10.94
First Cash $1.09 billion 2.91 $60.12 million $2.33 28.84

First Cash has higher revenue and earnings than Regional Management. Regional Management is trading at a lower price-to-earnings ratio than First Cash, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of current ratings and price targets for Regional Management and First Cash, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Regional Management 0 4 1 0 2.20
First Cash 0 2 5 0 2.71

Regional Management presently has a consensus target price of $26.00, indicating a potential upside of 9.47%. First Cash has a consensus target price of $64.00, indicating a potential downside of 4.76%. Given Regional Management’s higher probable upside, analysts clearly believe Regional Management is more favorable than First Cash.

Summary

First Cash beats Regional Management on 10 of the 15 factors compared between the two stocks.

About Regional Management

Regional Management Corp. is a diversified consumer finance company. The Company provides an array of loan products primarily to customers with limited access to consumer credit from banks, thrifts, credit card companies and other traditional lenders. Its products include small loans, large loans, automobile loans, retail loans, and optional payment and collateral protection insurance products. It offers small loans ranging from $500 to $2,500, through its branches. It offers large installment loans with cash proceeds to the customer ranging from $2,501 to $20,000. As of December 31, 2016, automobile loans were offered in amounts up to $27,500. As of December 31, 2016, retail loans were indirect installment loans structured as retail installment sales contracts that were offered in amounts of up to $7,500. Optional Payment and Collateral Protection Insurance Products offer customers a number of optional payment and collateral protection insurance products.

About First Cash

FirstCash, Inc., formerly First Cash Financial Services, Inc., is an operator of retail-based pawn stores in the United States and Latin America. The Company’s primary business is the operation of full-service pawn stores, which make small pawn loans secured by personal property, such as consumer electronics, jewelry, power tools, household appliances, sporting goods and musical instruments. The Company’s operates through two segments: the U.S. operations segment and the Latin America operations segment. The U.S. operations segment consists of all pawn and consumer loan operations in the United States and the Latin America operations segment consists of all pawn and consumer loan operations in Latin America, which includes operations in Mexico, Guatemala and El Salvador. In addition, some of the Company’s pawn stores offer small unsecured consumer loans or credit services products. The Company also operates consumer finance stores in Texas and Mexico.

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