Comparing FirstCash and CompoSecure: Which Stock is Stronger?

Investors are actively evaluating the potential of two mid-cap business services companies, FirstCash Holdings, Inc. and CompoSecure, Inc., listed on NASDAQ as FCFS and CMPO, respectively. This analysis will compare their profitability, risk factors, analyst recommendations, earnings, valuations, dividends, and institutional ownership to determine which stock presents a more attractive investment opportunity.

Profitability and Financial Stability

Examining the profitability metrics reveals that FirstCash significantly outperforms CompoSecure in key areas. FirstCash’s net margins, return on equity, and return on assets indicate a stronger financial foundation. This suggests that FirstCash is managing its resources more effectively than CompoSecure, making it a potentially safer investment.

Risk Analysis and Volatility

When assessing volatility, FirstCash has a beta of 0.69, indicating that its share price is 31% less volatile than the S&P 500 index. In contrast, CompoSecure has a beta of 0.97, suggesting its stock is only 3% less volatile than the market average. This lower volatility in FirstCash may provide a more stable investment option for risk-averse investors.

Analyst recommendations provide further insights into investor sentiment. According to MarketBeat.com, FirstCash currently holds a consensus target price of $154.40, which implies a potential upside of 0.18%. Meanwhile, CompoSecure has a lower consensus target price of $20.00, indicating a potential downside of 3.01%. Given these figures, analysts appear to favor FirstCash as the more promising option.

Valuation and Earnings Comparison

In terms of revenue and earnings, FirstCash demonstrates a stronger performance than CompoSecure. FirstCash’s higher revenue and earnings per share (EPS) reflect its successful business model. While CompoSecure trades at a lower price-to-earnings ratio, suggesting it is currently more affordable, this may not compensate for its lower earnings and growth potential.

Overall, FirstCash exceeds CompoSecure in 10 out of 14 factors assessed in this comparison. This suggests that FirstCash not only offers better profitability but also a more favorable investment outlook.

Company Profiles

Founded in 1988 and headquartered in Fort Worth, Texas, FirstCash operates retail pawn stores across the United States, Mexico, and Latin America. The company functions through three segments: U.S. Pawn, Latin America Pawn, and Retail POS Payment Solutions. These stores provide loans against personal property while also selling merchandise acquired through forfeitures and other purchases. In December 2021, the company rebranded from FirstCash, Inc. to FirstCash Holdings, Inc.

On the other hand, CompoSecure, established in 1910 and based in Somerset, New Jersey, specializes in manufacturing metal, composite, and proprietary financial transaction cards. Its offerings include a range of metal card products and advanced security solutions such as the Arculus Cold Storage Wallet, which supports various digital assets, including Bitcoin and Ethereum.

Investors looking to make informed decisions should consider the comparative strengths of both companies. While CompoSecure provides a lower entry price, FirstCash’s stronger profitability and lower volatility may render it a more appealing choice in the long term.