EZPW

EZPW is a steadily compounding pawn retailer that the market is still pricing conservatively. Revenue has climbed every year from $730M (FY2021) to $1.27B (FY2025, +9.7% YoY), and the operating leverage is finally showing: FY2025 operating income rose 32.6% to $149M and diluted EPS jumped 29.1% to $1.42 as net income grew 31.9% to $110M. Gross margin is a healthy 58.5% and operating cash flow ($149M) fully covers the modest $38.6M capex, so growth is self-funding. At $33.32 the stock trades at 23.5x trailing EPS and just 1.5x sales — undemanding for a business growing earnings near 30%, implying a sub-1 PEG if even half that momentum persists.

The balance sheet is a genuine strength but needs a careful read. Cash ballooned 175% to $470M, yet the MD&A makes clear $292.4M of that came from issuing the 2032 Senior Notes in March 2025, which also drove long-term debt up 131% to $518M (the company repaid the 2025 convertibles on May 1). The debt is long-dated — $230M due 2029, $300M due 2032, with zero current maturities and only $30.9M of interest due in the next year against $149M of operating cash flow — so refinancing risk is years away and liquidity is ample (current assets $1.13B vs. $201M current liabilities). Liabilities/equity of 0.90x is conservative for a lender. The flip side: ROE is a pedestrian 10.7%, partly because the freshly raised cash sits idle on the balance sheet, so management's deployment of that war chest (acquisitions, the new buyback) is what converts a solid business into a great stock.