Shares of Dollar Financial Corp. rose Friday after the payday lender posted fourth-quarter results that beat Wall Street expectations despite some difficulties related to the economic downturn.
The Berwyn, Penn.-based company posted a fourth-quarter loss of $1.30 per share after the market closed Thursday. Adjusted for expenses related to litigation, store closings and severance and acquisition costs and other items, Dollar Financial said it earned 39 cents per share in the period.
Analysts polled by Thomson Reuters, on average, were expecting adjusted profit of 33 cents per share.
Revenue for the quarter was $124.4 million, above Wall Street's forecast for $121.4 million.
Management said it expects profit of $1.90 to $2.10 per share for fiscal year 2010, excluding a 40-cents-per-share impact from adopting new accounting rules. It is unclear if the average analyst projection of $1.79 per share include the new rules.
The company said the wide forecast range reflects uncertainty about the economic recovery, but it expects to "significantly expand its global store base" including growth in Poland and the U.K. and Canada, where new regulations may make smaller chains available for sale.
Given the tightening regulatory environment in the U.S., RBC Capital Markets analyst Jason Arnold said the company's emphasis on foreign expansion makes it more appealing than peers with a domestic focus. He kept an "outperform" rating on the stock and raise his price target by $1 to $18.
Similarly, JMP Securities analyst John Hecht said the company's move into Poland "constitutes a new, potentially considerable and long-term growth engine." He raised his estimate for fiscal year 2010 to $1.99 from $1.70, boosted his price target to $23 from $18, and kept a "market outperform" rating on the stock.
Taking a slightly contrary view was Sterne Agee analyst Henry J. Coffey Jr., who kept a "neutral" rating and cut his 2010 estimate to $1.70 from $1.90, including the cost of the new accounting rules.
Dollar Financial's guidance called for 2010 earnings before interest, taxes, depreciation and amortization of $145 million to $155 million. "This is modestly higher than we were looking for, but arguably we are surprised, given the benefits of the recently announced acquisitions and the significant gains in pricing being allowed in the Canadian markets, that the outlook is not much stronger than this," Coffey said in a note to clients.
In afternoon trading, Dollar Financial share gained 74 cents, or 4.4 percent, to $17.40 despite a broader market decline. The stock has ranged between $4.83 and $21.91 in the past 52 weeks, and started the session up about 62 percent since the start of the year.
