World Acceptance Corporation (NASDAQ: WRLD) and FirstCash (NASDAQ:FCFS) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their profitabiliy, valuation, analyst recommendations, earnings, institutional ownership, risk and dividends.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for World Acceptance Corporation and FirstCash, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
World Acceptance Corporation 3 0 0 0 1.00
FirstCash 0 3 4 0 2.57

World Acceptance Corporation currently has a consensus target price of $52.33, indicating a potential downside of 31.92%. FirstCash has a consensus target price of $56.67, indicating a potential downside of 2.05%. Given FirstCash’s stronger consensus rating and higher probable upside, analysts plainly believe FirstCash is more favorable than World Acceptance Corporation.

Earnings and Valuation

This table compares World Acceptance Corporation and FirstCash’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
World Acceptance Corporation $531.73 million 1.25 $142.91 million $7.98 9.63
FirstCash $1.59 billion 1.76 $249.51 million $1.97 29.37

FirstCash has higher revenue and earnings than World Acceptance Corporation. World Acceptance Corporation is trading at a lower price-to-earnings ratio than FirstCash, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

98.5% of World Acceptance Corporation shares are owned by institutional investors. 28.2% of World Acceptance Corporation shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Dividends

FirstCash pays an annual dividend of $0.50 per share and has a dividend yield of 0.9%. World Acceptance Corporation does not pay a dividend. FirstCash pays out 25.4% of its earnings in the form of a dividend.

Profitability

This table compares World Acceptance Corporation and FirstCash’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
World Acceptance Corporation 13.13% 15.75% 8.48%
FirstCash 7.29% 8.92% 6.25%

Risk & Volatility

World Acceptance Corporation has a beta of 2.34, meaning that its share price is 134% more volatile than the S&P 500. Comparatively, FirstCash has a beta of 0.9, meaning that its share price is 10% less volatile than the S&P 500.

About World Acceptance Corporation

World Acceptance Corporation operates a small-loan consumer finance business in 15 states and Mexico as of March 31, 2016. The Company offers short-term small installment loans, medium-term larger installment loans, related credit insurance and ancillary products and services to individuals. The Company offers standardized installment loans generally between $300 and $4,000 through 1,339 branches in Alabama, Georgia, Idaho, Illinois, Indiana, Kentucky, Louisiana, Mississippi, Missouri, New Mexico, Oklahoma, South Carolina, Texas, Tennessee, Wisconsin and Mexico as of March 31, 2016. The Company generally serves individuals with limited access to other sources of consumer credit, such as banks, credit unions, other consumer finance businesses and credit card lenders. In the United States branches, the Company also offers income tax return preparation services to its loan customers and other individuals.

About FirstCash

FirstCash, Inc., formerly First Cash Financial Services, Inc., is an operator of retail-based pawn stores in the United States and Latin America. The Company’s primary business is the operation of full-service pawn stores, which make small pawn loans secured by personal property, such as consumer electronics, jewelry, power tools, household appliances, sporting goods and musical instruments. The Company’s operates through two segments: the U.S. operations segment and the Latin America operations segment. The U.S. operations segment consists of all pawn and consumer loan operations in the United States and the Latin America operations segment consists of all pawn and consumer loan operations in Latin America, which includes operations in Mexico, Guatemala and El Salvador. In addition, some of the Company’s pawn stores offer small unsecured consumer loans or credit services products. The Company also operates consumer finance stores in Texas and Mexico.

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