Market Overview

JPM: Cash America International Fully Valued Following Spin-Off


Cash America International Inc (NYSE: CSH) is fully valued after its recent spin-off of sub-prime lender Enova International, Inc. (NYSE: ENVA), an analyst said Monday.

JMP's David Scharf downgraded Cash America to Market Perform, from Outperform, saying likely earnings growth at Cash America doesn't support its current share price.

Cash America, which retains a 20 percent stake in Chicago-based Enova after the November 13 spin-off, traded recently at $24.66, down 2.1 percent.

Enova is off 17 percent since trading began. On Monday, Enova fell 1.5 percent, changing hands recently at $23.00.

Scharf said factoring in Cash America's 20 percent stake in Enova "remains a wild card," adding that his earlier Outperform rating had included improving results from both the pawn shop business as well as the Enova unit, which operates exclusively online.

Scharf noted that Street estimates of Cash America's future earnings are near or above the range offered recently by the company.

That "allows little room for error" for a stock with a relatively high ratio of price to earnings, Scharf said.

Cash America has noted that consumer advocacy groups as well as federal and state legislators have recently suggested tightening rules "so as to severely limit, if not eliminate" so-called payday and other high-interest loan products offered by pawnbrokers and online lenders.

Latest Ratings for CSH

Apr 2016JMP SecuritiesDowngradesOutperformMarket Perform
Apr 2016MacquarieUpgradesUnderperformNeutral
Oct 2015JMP SecuritiesMaintainsMarket Outperform

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