Dollar Financial Corp. - Momentum

Dollar Financial Corp. (DLLR) has been grinding higher for the last 4 months, recently hitting a new multi-year high at $32.47 on another strong quarter from late October that included a 20% increase in revenue. With a bullish next-year estimate and average earnings surprise of 18% over the last four quarters, this Zacks #1 rank stock has a fist full of momentum.

Company Description

Dollar Financial Corp. provides retail financial services to unbanked and underbanked consumers. The company owns and operates over 1,250 stores in the US, Canada, the UK, Ireland and Poland and has market cap of $741 million.

Short-term lenders have been strong for the last 2 years as cash-strapped consumers search for liquidity in the weak economy. That trend showed up in late October when Dollar Financial reported strong Q3 results that once again beat expectations.

First-Quarter Results

Revenue for the period was up 20% from last year to a record $174 million. Earnings also looked good, coming in at 46 cents, one penny ahead of the Zacks Consensus Estimate, where the company now has an average earnings surprise of 18% over the last four quarters.

Dollar Financial noted that its loan loss provision was mostly unchanged from last year at 15.2%.

The company also continues to pursue its strategy to expand geographically, opening 14 stores in the UK and acquiring Swedish company Folkia that has is a leader in mobile lending and borrowing technology.

Financial Profile

Dollar Financial also saw cash and equivalents jump $59 million from last year to $286 million. Its total debt was up $234 million to $803 million.

Estimates

Estimates were up on the good quarter, with the current year adding 7 cents to $2.20 and the next-year estimate climbing 16 cents to $2.80, a bullish 27% growth projection.

Valuation

But in spite of the gains, DLLR still has value, trading with a PEG ratio (PE/Growth) of just 52%

2-Year Chart

On the chart, DLLR has been grinding higher for the last few months, recently spiking to a new multi-year high at $32.47. The MACD below the chart is looking bullish too, with the short-term average advancing ahead of the long-term average. Look for support from the long-term trend on any weakness, take a look below.

Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the new Zacks Momentum Trader Service.
 
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