Q: Do you see CURO as a competitor to GSY? How do you like CURO as a risk/reward opportunity? Is there profitably on the horizon? Ty, Chris.
5i Research Answer:
CURO operates as a consumer financing company, but unlike GSY the company’s revenue has been in a steady decline in recent years, and CURO is still operating at a significant loss. As a result, the book value per share is negative. The balance sheet has $2.7B in long-term debt for a market cap of $45M, which is extremely leveraged. The company could be destined for bankruptcy if operating results do not improve.
We consider the name to be highly volatile, and we think the company has significant liquidity risk and size risk is also a factor here. Its 68% YTD decline reflects investor concern. We think GSY is a much safer choice.