KBW Starts Coverage On Cash America, Says 'Cash Has Optionality'

In a report published Friday, Keefe, Bruyette & Woods analyst Brian Zabora initiated coverage of

with a Market Perform rating and price target of $23. "Cash America has a high level of cash flow and with the eventual disposition of its remaining stake in Enova, we believe the company has a significant amount of optionality and potential for capital deployment," Zabora stated, while adding that most of the positives are already reflected in the current stock valuation. Following the 80 percent spinoff of Enova in 4Q14, as well as the recent sale of Cash America's Mexico operations, the analyst believes that the company has not only become a U.S.-focused pawn operator, but also that its exposure to payday lending has been reduced. The remaining 20 percent of Enova is expected to be disposed of by end-2016. According to the Keefe, Bruyette & Woods report, "Cash America is generating substantial free cash flow… The cash flow is resulting in a high level of capital deployment as the company announced a four million share repurchase authorization in January."