Another 12 months of 0 capital appreciation, page-11

Given that EZCORP is more expensive on a relative basis than Cash Converters, it was interesting to hear our Chairman Timothy Jugmans and EZCORP CEO Lachlan Given (our non-exec director) expressing their views earlier this month on the subject of returning capital to their shareholders through buybacks….

“On the share buyback side, obviously, we’re trying to balance our own growth with share buybacks. We listen to our shareholders, obviously, and we assess this every quarter, but we continue to buyback stock. We’ve done that very consistently across every quarter, and we see it as another good return on investment. We believe that our stock is very, very cheap. And so we are balancing buying that back with the really significant growth opportunities that we think we have just even in the regions in which we operate. So we’re trying to strike a balance between growth and scaling up our cashflows and our store base with what we see as a good return on investment in buying back stock. So hopefully, we’ve been very consistent with that message and consistent across quarters” - Lachlan Given – CEO EZCORP 01/02/2024

We are often focused as shareholders on the share price, I think it gives management wriggle room in saying they don’t control this, which is true. What they do have control over, and what we should hold them accountable for, are the investments they make and the returns on those investments.

The return from a buyback at these levels is simple to calculate. A fully franked dividend even simpler. If earnings are retained in the business, the onus is on management to demonstrate how the comparable return on investment is superior. This is observable in black and white twice a year in the reports. Ultimately the buck rests with the MD. If he cannot demonstrate superior returns on retained capital and refuses to return the capital to shareholders then all the accompanying words are meaningless.

I guess we will see in a few days.