Why EZCORP's Q3 Earnings Signal a Strong Buy Opportunity in the Pawn Industry

EZCORP (NASDAQ: EZPW) just delivered a Q3 2025 report that screams “buy this stock now.” The company's financial outperformance, operational scalability, and undervaluation metrics create a rare trifecta for investors seeking a high-conviction play in the pawn industry. Let's break down why this is a golden opportunity.

Financial Outperformance: A Engine of Growth

EZCORP's Q3 results were nothing short of explosive. Net income surged 48% to $26.5 million, while diluted EPS rose 36% to $0.34, far outpacing the S&P 500's average earnings growth. Total revenue hit $311 million, up 11% year-over-year, driven by a 7% increase in pawn service charges ($115.34 million) and a jaw-dropping 75% jump in jewelry scrapping sales to $26.97 million.

The real kicker? Adjusted EBITDA jumped 42% to $45.2 million, a testament to the company's operational efficiency. This isn't just growth—it's sustainable, margin-driven growth. With a 38.5% gross margin in the U.S. Pawn segment and a 14.21% EBITDA margin, EZCORP is converting revenue into profits faster than its peers.

Operational Scalability: A Blueprint for Expansion

EZCORP's expansion strategy is a masterclass in scalability. The company added 52 stores in Q3 alone, including 40 in Mexico and 10 in Latin America, bringing its total store count to 1,336—a 32% increase since fiscal 2020. This isn't just geographic diversification; it's strategic dominance in high-growth markets.

The U.S. Pawn segment contributed $47.6 million in segment contribution, up 32%, while the Latin America segment delivered $12.4 million, up 20% (30% on a constant currency basis). With $472.1 million in cash and cash equivalents (up from $170.5 million in fiscal 2024), EZCORP has the liquidity to fund organic growth and M&A. The recent acquisition of 40 Mexican stores and the opening of a luxury pawn shop in Miami Beach signal a disciplined, high-margin expansion playbook.

Undervaluation Metrics: A Discounted Gem

Here's where the rubber meets the road for value hunters. EZCORP's P/E ratio of 8.2x is a stark contrast to the S&P 500's 18.4x and its peers' averages. For context:
- PRA Group (PRAA) trades at 8.7x P/E.
- NerdWallet (NRDS) is at 26.97x.
- Atlanticus Holdings (ATLC) has a P/E of 9.64x.

EZCORP's P/S ratio of 0.6x is equally compelling. While the industry average is 2.7x, EZCORP's ability to generate $183.6 million in gross profit on $311 million in revenue (58.71% margin) justifies the discount. Even better, its P/B ratio of 0.86x means the market is underpricing its tangible assets—inventory, real estate, and pawned goods.

The Big Picture: Why This Is a Buy

EZCORP isn't just surviving in the pawn industry—it's redefining it. The company's digital initiatives, like the EZ+ Rewards program (6.5 million members) and enhanced e-commerce capabilities, are future-proofing its business. Meanwhile, its low debt-to-equity ratio (0.729) and $300 million in senior notes give it the firepower to capitalize on opportunities without overleveraging.

Analysts project 14.2% annual earnings growth, a figure that's conservative given the company's 30%+ growth in Latin America and 11% increase in Pawn Loans Outstanding (PLO). At current valuations, even a 50% earnings surprise would justify a 20%+ price move.

Conclusion: Act Before the Market Wakes Up

EZCORP is a strong buy for investors who understand the intersection of defensive cash flow, high-margin growth, and undervaluation. With a P/E of 8.2x, P/S of 0.6x, and a 42% EBITDA jump, this stock is trading at a discount to its intrinsic value. The company's $472 million liquidity war chest and aggressive expansion pipeline make it a prime candidate for a 20%-plus return in the next 12 months.

Don't wait for the broader market to catch up. Buy EZCORP now—before the next earnings report turns this pawn shop into a goldmine.