Cash America's shares jump on improved earnings outlook
Shares of Fort Worth-based Cash America International (ticker: CSH) were up nearly 10 percent this morning after the pawn shop operator said first-quarter earnings should top its previous estimates. The company now expects to earn $1.50 to $1.55 a share, up from the $1.25 that was the top of its earlier outlook. Cash America said the improvement is based on lower losses on online consumer loans, better margins on retail sales and operating efficiencies. It expects to discuss its first-quarter earnings with financial analysts the morning of April 24.
Cash America also said its board authorized management to review a spin-off and other strategic alternatives for its online lending unit, Enova International. The company in 2012 withdrew plans for an initial public offering for the unit that had been announced the previous year, when it estimated an IPO could raise up to $500 million. In Thursday's announcement it said a tax-free spin-off of at least 80 percent of Enova's shares, if it takes place, would likely occur in late 2014 or early 2015. It said Enova had revenues last year of $766 million.
"We now think that pursuing a separation of the businesses and management teams into two discrete companies is potentially very beneficial for the operating activities and ongoing strategy of each business," Cash America CEO Dan Feehan said in a prepared release. "As independent companies, both Cash America and Enova would be better positioned to focus on their industry-specific business strategies and the regulatory environments related to the specific products each company offers and to recruit and hire talent oriented to each specialized business discipline."
-- Jim Fuquay