FirstCash (FCFS) Q3 2026 earnings review
FirstCash profit hits a record, but U.S. loan growth slows
FirstCash, the international operator of more than 3,300 pawn stores, posted record third-quarter profits even as its core U.S. lending growth cooled. Total revenue rose 18% to $1.1 billion — or 14% outside the U.K. by our math as last year's H&T buyout lapped — while profit per share excluding one-offs climbed 19%. Chief executive Rick Wessel pointed to record loan balances, yet wholesale gold scrap sales doubled and supplied 60% of the quarter's operating cash profit gain by our math.
| Revenue outside the U.K. (like-for-like) | +14% total revenue +18% to $1.10B |
|---|---|
| Profit per share, excluding one-offs | $2.68 +19% from a year ago |
| U.S. same-store pawn loans | +12% +19% in Q1 and Q2 |
| Q4 pawn fee outlook | Cut U.S. low-double-digit; LatAm low-to-mid teens |
⚖️ Verdict: 🔴 Bearish
The story got worse because U.S. same-store pawn loan growth slowed from 19% last quarter to 12%, forcing management to trim its fourth-quarter fee outlook. At the same time, the Mexican peso lost its currency tailwind and the retail financing unit kept shrinking, leaving earnings more reliant on melting forfeited gold jewelry. On the positive side, strong cash collection funded $123 million in stock buybacks and a 10% dividend hike.
The question now is whether ~12% U.S. loan growth is a durable floor or the start of a deeper slowdown once high gold prices stop lifting jewelry loan sizes. One view is that inflation keeps bringing new borrowers into pawn shops; the other is that recent growth was mostly a gold windfall. Fourth-quarter U.S. same-store loan balances and average loan sizes will tell.
🐂 Bull Case
Pawn Cash Flows Funded Buybacks and a Dividend Hike
FirstCash operates retail pawn stores that make small loans backed by personal property and sell forfeited items. Because customers repaid or forfeited more loans this quarter, cash flow after store investments and loan funding nearly tripled to $129.3 million, excluding one-offs. The pawn operator used that cash to buy back $123 million of stock and raise its quarterly dividend by 10% to $0.46 per share.
In August, management also expanded its bank credit line from $700 million to $1.055 billion and extended the maturity to 2031. The amended agreement "allows for a net debt leverage ratio of up to 3.5 times adjusted EBITDA", giving the company room to fund the pending Ramsdens buyout while keeping net debt at 2.7 times today.
What to watch: total debt compared to earnings after the Ramsdens deal closes around year-end. While the bank line allows 3.5 times, FirstCash's separate bond rules cap unlimited stock buybacks once debt exceeds 2.75 to 3.0 times earnings.
U.K. Software Rollout Finished as Ramsdens Nears Close
FirstCash entered the United Kingdom in August 2025 by acquiring H&T, the country's largest pawnbroker. This quarter, the company finished installing its own "FirstPawn point-of-sale and loan management system across all H&T stores and its jewelry processing center". Chief executive Rick Wessel expects the software to speed up how fast stores turn over loans and merchandise, while U.K. regulators and shareholders also approved the upcoming buyout of 175 Ramsdens stores.
With U.K. pawn loans up 14% from a year ago on a same-store basis, the three pawn divisions will generate about 90% of segment profit this year. Lapping the H&T deal slowed total company revenue growth from 29% last quarter to 18% in the third quarter, or 14% outside the U.K. by our math.
What to watch: the share of U.K. merchandise sitting unsold for over a year. That figure improved from 13.3% at year-end to 11.6% this quarter, and a further drop will show the new software is working.
🐻 Bear Case
U.S. Pawn Loan Growth Slowed From 19% to 12%
"Pawn demand remains exceptionally strong with a record $908 million in pawn receivables and all geographic segments posting double-digit increases in both same-store pawn receivables and pawn fees," chief executive Rick Wessel said. Pawn receivables are the loan balances customers owe the stores, and they drive the fee revenue FirstCash collects over the following months.
Beneath that record dollar total, growth in the flagship U.S. business cooled noticeably. Same-store U.S. pawn loans grew 12% from a year ago, down from 19% in both the first and second quarters. Because loan balances grew more slowly, U.S. pawn fee growth stepped down to 12.3%, missing the mid-teen target management set for the second half just three months ago.
FirstCash also lowered its fourth-quarter U.S. fee forecast to a low-double-digit rate. By our math, that leaves full-year U.S. fee growth near 13%, below the prior mid-teen plan. Across all regions, FirstCash added $10 million to its loan book this quarter, whereas the U.S. and Latin America businesses alone added $49 million in the same quarter last year by our math.
What to watch: U.S. same-store pawn loan growth in the fourth quarter. A reading below 10% would end the company's 13-quarter streak of double-digit expansion and point to slower fee growth in 2027.
Gold Scrap Doubled and Carried Profit Growth
When a customer does not repay a jewelry pawn loan, FirstCash can melt the forfeited item and sell the gold to wholesalers. High gold prices and larger jewelry loans drove wholesale scrap sales up 99% from a year ago to $172.5 million, making scrap a major profit driver that also increases the company's reliance on commodity prices.
- Scrap gross profit: $32.4 million, up $13.9 million or 75% from a year ago by our math
- Share of profit growth: scrap supplied 60% of the $23.1 million increase in operating cash profit (adjusted EBITDA) by our math
- Cost of scrap sold: rose 5.4 percentage points of total revenue, trimming overall gross margin by 1.1 percentage points to 49.5%
Because scrap carries an 18.8% gross margin compared with 38.8% on retail store sales, the surge in gold melting diluted the company's gross margin percentage even as it added dollars. Jewelry now makes up 72% of all pawn loan collateral and 67% of store inventory, up from 60% of inventory a year ago.
What to watch: wholesale scrap gross profit and average U.S. loan size ($319, up 10% from a year ago) in the fourth quarter. A drop in gold prices would shrink both scrap earnings and the amount customers can borrow against jewelry.
Retail Financing Keeps Shrinking on Furniture Weakness
American First Finance (AFF), FirstCash's point-of-sale payment subsidiary, provides lease-to-own and financing plans at 17,000 retail partner stores. Gross transaction volume — the value of new leases and loans originated — fell 14.6% from a year ago to $212.5 million, "due primarily to continued weakness in the furniture industry coupled with an increased strategic focus on merchant quality".
Because past originations are running off, AFF net revenue dropped 20% to $55.7 million and segment pre-tax profit fell 28% to $33.2 million. Even as volume shrank, the share of lease balances past due rose to 26.5% from 25.5% a year ago, and the provision rate for new loan losses increased to 29.1% from 28.0%. Off-balance-sheet loans held by a bank partner also grew to $45.5 million from $9.7 million a year ago.
What to watch: fourth-quarter new originations, which management forecasts to fall in the mid-teens percentage range. Until originations stop shrinking, AFF revenue and profit will continue to decline into 2027.
Currency Tailwinds in Latin America Have Ended
Latin America is FirstCash's largest region by store count, with 1,839 locations mostly in Mexico. In the third quarter, a stronger Mexican peso boosted reported segment revenue growth by 8 percentage points, turning a 27% local-currency gain into a 35% increase in U.S. dollars. Segment pre-tax profit rose 37% in dollars to $64.6 million.
That currency help has now vanished. FirstCash noted that the peso currently trades near 18.3 per dollar, matching last year's fourth-quarter rate. As a result, management expects fourth-quarter Latin America pawn fee growth to slow to a low-to-mid teens rate in both dollars and local currency, down from 24% dollar growth in the third quarter and below the 20% second-half dollar pace guided in July.
What to watch: the Mexican peso exchange rate and local-currency same-store loan growth (15% this quarter). With the currency boost gone, Latin America will no longer offset slower U.S. growth in dollar terms.
💲 Other KPIs
Merchandise held for sale in pawn stores grew 31.2% from a year ago, outpacing the 17.0% growth in retail merchandise sales. The buildup reflects newly acquired stores and higher gold values as jewelry rose to 67% of inventory from 60% a year ago. Inventory over a year old remained low at 1.6% in the U.S. and 1.3% in Latin America.
Weighted-average diluted shares fell 2.6% from a year ago and 1.6% from last quarter. FirstCash bought back 592,000 shares for $123 million in the third quarter, bringing trailing twelve-month repurchases to 1.37 million shares for $275 million. The lower share count added about 3 percentage points to per-share profit growth.
Total debt minus cash rose 7.8% from a year ago and 3.2% from last quarter as the company funded $123 million in buybacks and 14 store real estate purchases. Because earnings grew faster, net debt to operating cash profit (adjusted EBITDA) held steady from last quarter at 2.7 times, or 2.6 times including full-year credit for acquisitions.
🔮 Guidance
Cut. Management now forecasts fourth-quarter U.S. pawn loan balances and fees to grow at a low-double-digit rate, down from the mid-teen or better second-half plan set in July. By our math, that puts full-year U.S. fee growth at 13.0%. The company cited lapping larger domestic store acquisitions made in the fourth quarter of 2025.
Unchanged. Fourth-quarter U.S. merchandise sales are planned to grow 8% to 10%, slightly below the third quarter's 10.3% pace as store acquisitions lap. Combined with 11.2% growth over the first nine months, the fourth-quarter range keeps the full-year result inside the prior 10% to 15% target. U.S. store operating costs are forecast to rise in the mid-single digits.
Cut. With the Mexican peso now at 18.3 per dollar — flat against last year — fourth-quarter dollar and local-currency growth will match at a low-to-mid teens rate for loans and fees, with retail sales slightly higher. That steps down from the 20% fee and mid-20% retail dollar growth planned for the second half when the peso was stronger. Store expenses will rise 10% to 12%.
New. In the first full quarter lapping the August 2025 H&T buyout, U.K. pawn loans and fees are planned to grow in the mid-to-high single digits, while retail gross profit grows in the low-double digits and expenses rise about 10% on new store openings. The company did not repeat a specific full-year dollar target for U.K. segment profit.
Unchanged. Management forecasts fourth-quarter point-of-sale originations to fall in the mid-teens, matching the third quarter's 14.6% drop and what the prior outlook implied. Fourth-quarter net revenue is planned to fall 15% to 20%, which leaves full-year net revenue down 21% to 23% by our math, inside the prior 20% to 25% decline range.
Unchanged. Fourth-quarter interest expense is expected to rise about 5% from a year ago to roughly $37 million, putting full-year interest expense up 20% by our math — the top of the prior 15% to 20% outlook. The full-year effective tax rate plan stays at 26% to 27%, matching the 26.4% rate recorded over the first nine months.
❓ Key Questions
Why did U.S. same-store loan growth slow so sharply?
U.S. same-store pawn loans slowed from 19% growth in the second quarter to 12% in the third, and management cut the fourth-quarter fee plan. How much of the slowdown came from fewer borrowers versus smaller loan amounts?
How much gold scrap volume is hedged for 2027?
Wholesale scrap jewelry supplied 60% of the quarter's operating cash profit growth as sales doubled to $172.5 million. Did FirstCash add to its forward gold sales contracts during the third quarter, and at what prices?
Where did the second-half store acquisition pipeline go?
Last quarter's outlook called for 35 to 40 acquired pawn stores in the second half outside of Ramsdens, but FirstCash bought only four stores in the third quarter. Were deals delayed into 2027 or dropped over price?
Will the Ramsdens buyout cap stock buybacks under bond rules?
The bank credit line now allows debt up to 3.5 times earnings, but the company's senior notes restrict unlimited buybacks above 2.75 to 3.0 times. Where will bond leverage sit when the £232 million Ramsdens deal closes?