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In the annals of the history of professional wrestling, one moment stands head and shoulders above all others. Roddy Piper vs Adorable Adrian Adonis. The build up was tremendous. Piper used to make fun of Adrian and talk smack about him on the trendsetting interview segment, Piper's Pit. With Cowboy Bob Orton, his longtime buddy, by his side, they would constantly mock Adrian. Piper had nicknamed Orton, “Ace”, representing Orton’s unmitigated loyalty to Piper. Until Adonis shocked the world by usurping Piper’s Pit with his own interview show, “The Flower Shop” and having Orton now as his own bodyguard, wearing a pink hat. Much like the classic Shakespearean quotation, “Es Tu, Brute?”, Piper turned to Orton and inquired, “ACE?”. To which Orton replied, “But Roddy, you were paying me peanuts”.
[img]http://groups.msn.com/_Secure/0RwCqAngVtgVSswTh0eKSi*VJMZYZytpQaah0s9PPsHhJwE3YB cVQnO77nq9LvGzvTGrNo6xkuNJ5zHIPGFAIZjvYkoDOXc8fBV9 iEEmInQo/hair02.jpg?dc=4675435261144943305[/img]
Piper got his revenge, trashing the flower shop with a baseball bat and defeating Adrian Adonis at Wrestlemania. The moral of the story is, everyone always need an Ace.
Today I bought AACE (Ace Cash Express Inc) at 31.34. I will sell it in 4 to 6 weeks at 36.20. Here’s why I like AACE:
ACE Cash Express, Inc. is headquartered in Irving, Texas and is the largest owner, operator and franchiser of check-cashing stores in the United States. Founded in 1968, the Company had a total network of 1,184 stores, consisting of 974 company-owned stores and 210 franchised stores in 36 states and the District of Columbia as of December 31, 2003. ACE also operates self- service machines, which provide check-cashing or other financial services without the need for a service associate, at 20 company-owned store locations, 29 third-party bill-payment locations, and, during the tax season, ACE plans to place approximately 220 machines at H&R Block retail offices. ACE offers a broad range of check-cashing and other consumer financial services. ACE is one of the largest providers of MoneyGram wire transfer transactions, and it offers money orders, bill payment services, and prepaid local and long distance telecommunication services. Small, short-term consumer loans are also available to customers at various ACE company-owned stores. The No. 2 player is Dollar Financial, a private firm with close to 300 company-owned stores. Ace clearly is the gorilla!
AACE’s stock is up over 270% in the last 52 weeks yet its PE still is a very affordable 22. The price momentum exhibited over this climb is nothing short of astounding. The r^2 of a time series regression for the last 12 months is an extraordinary 0.88. What’s even more amazing is its r^2 for the last 6 months, which is 0.93. That’s almost a straight line going up!! Through all of the world and economic turmoil, all AACE stock has done is to keep going up!
Ace caters to families with an average yearly income of $35,000, and that often don't have a bank account. Many often need quick access to small amounts of cash. So say you don’t have a credit card and you’re getting paid at the end of next week. You finally get this hot girl to go out on a date with you, but you don’t have any cash and you can’t wait until the end of next week! Ace offers small payday loans averaging $200 in exchange for a check that's deposited at the end of the loan period.
A surprising 15% of U.S. households don't have checking accounts.
Many people simply have given up all hope of managing the funds in an account, having bounced checks repeatedly. Others can't justify the monthly and per-check fees, given that they're living paycheck to paycheck.
I remember when I used to work at the plant. The one plant guy would take everyone’s paycheck and go to the local savings bank and literally “cash” everyone’s check. He’d drive back to the plant with 20 separate envelopes filled with money. ACE company-owned stores cashed 3.3 million checks, resulting in check-cashing fees of $28.8 million, a 6.7 percent increase from $27.0 million in the second quarter of fiscal 2003.
That’s how a lot of people live. They don’t have checking accounts or credits cards. They live check to check. The way they pay bills is to take their cash to an ACE store and have ACE pay the bills for them…for a fee of course! Ace gets almost a buck a payment! Banks offer a similar service to account holders who want to pay their bills online using their PCs. The difference is that Ace's target customers are unlikely to have a bank account, much less a PC.
Electronic payment services aren't entirely new to Ace. It already offers such services to customers of companies that sign partnerships with Ace. Its partners include PrimeCo Personal Communications, Texas Utilities Electric Co., Lone Star Gas and Bell South. In Texas, Ace handles 90,000 bills per month for TU Electric and about 50,000 for Lone Star Gas. And it expects to process more than 600,000 payments over the next 12 months for PrimeCo. Ace acts as the payment window for these companies. Their customers can come into an Ace office and pay specific bills covered under contract. By directing their customers to Ace, the partner firms can close their in-house payment offices and cut costs. Consistent with many American trends, this outsourcing is clearly the way to go.
Some of Ace’s customers do have checking accounts. Though they may completely mismanage them. Another way Ace makes money is its post-dated check, or payday loan product, which is a cash advance secured by a check written for a larger sum. It is designed to assist customers who have insufficient funds in their accounts. A customer in need of $50, for example, might write Ace a post-dated check for $60. These fees are less than what would happen if the customer bounced a check, so they don’t mind paying them.
Ace has been growing their business organically by simply adding locations. Each store pays out in about 3 years, which is a pretty good return, considering Ace’s weighted average cost of capital.
So how does this translate to moolah? In the last 4 years, ACE has grown their revenue by over 28% per year, with earnings climbing at a rate of 15.7% over the same period. Guess what? Their business model works. It has been working. With their simple plans for expansion growth, it will continue to work.
If we assume initial earnings of $14.6 million grow at a rate of 15.71%, and we discount those future earnings at a rate of 15.00%, we arrive at a net present value for the company's next 10 years of earnings of $151 million. To account for potential earnings beyond the 10th year, we estimate a growth rate of 6.00%, a discount rate of 12.00%, and we arrive at a continuing value of $274 million. To complete the calculation we add these two figures together, subtract the long-term debt for AACE ($32.2 million), and divide by the outstanding shares (10.7 million) to get a per share intrinsic value of $36.81.
ANALysts expect AACE to make $1.54/share in fiscal 2004. Don’t make me laugh! My stomach is killing me from laughing so much. $$$MR. MARKET$$$ sees AACE baby making $1.67 for fiscal 2004 on revenues of $257 million. At today’s PE of 22, this takes the share price to $36.81, right about where I will be selling it. Shoot..I did it again! Remember, these guys have blasted…BLASTED!...earnings estimates quarter after quarter after quarter. Now that AACE has provided earnings guidance to Wall Street, you think they intend on missing their numbers?? Don’t make me LAUGH!
What makes AACE work so well? Start with a ROE of 16.6% vs. S&P 500 average 9.5%. Add a price to cash flow of 13.3 vs. S&P 500 of 18.2 . Top it off with a gross margin of 37%. Its cash and receivables on its balance sheet continue to grow as its total liabilities shrink. With all of the cash that has been piling in, they have been buying down their debt. This stock makes money in a low risk business..and it’s still cheap! Each store is its own separate little profitable business, catering to its own niche geographical demographic. AACE keeps adding stores, and keeps replicating this business model in town after town. ACE secured commitments to open 12 more franchised stores over the next five years, bringing its five-year commitment to a total of 104. Year-to-date, ACE has opened 10 company-owned stores and executed leases for another 31 stores. Of the 31 stores leased but not yet open, 18 are currently under construction and 13 are in the permitting process. An additional 24 leases for company-owned stores are being negotiated. ACE remains committed to meeting the goal of adding 500 stores to the ACE network during the next five years.
AACE has been seeing stronger than expected same store revenue increases in its core business of check cashing, stronger than expected increases in same store loan fees and interest, and lower interest expense due to more efficient cash management of the Company's revolving line of credit.
I’m not the only person who likes this stock. Fidelity owns over 9% of it in their low Priced Stock Fund. The way AACE stock is moving, Fidelity may have to put it in a different fund!
Here’s what the boss had to say:
"We are very pleased with our growth and progress during the past six months. Our focus on an operational excellence model continues to pay off with consistent improvements," said Donald H. Neustadt, chief executive officer of ACE. "And I believe ACE is well-positioned for future growth as our integrated technology and transaction processing capabilities allow us to easily add stores to our nationwide network without compromising the quality service our customers expect."
ACE Cash Express, Inc. is ranked the #1 franchise in the check-cashing category by Entrepreneur Magazine. In addition, ACE made the "Top 100 Franchises List" ranking 59th among the 500 franchise companies rated. This is the 6th consecutive year that the Company has ranked first in its industry.
"I am pleased to be a part of not only the top franchise in our industry, but one of the top 100 franchises in the nation," said Marty Mazer, Divisional Vice President of Franchise. "We have sold franchises to a diverse set of entrepreneurs, many of which own other franchises or provide services which compliment our business. ACE offers franchisees a great opportunity to succeed in this industry and we are very excited about growing the franchise business." Boy, once people see how easy it is to make a buck cashing checks, you’ll see an ACE next to ever Burger King!
Over the past year, ACE opened 32 franchises and has signed agreements to open 105 more over the next five years. As of September 30, 2003, ACE had 206 franchised locations out of its 1,174 total store network.
Watch out for Hot Rod to make his return to the squared circle. By the way, Cowboy Bob Orton’s son, Randy, has a featured match against Mick Foley at Wrestemania this month.
[img]http://groups.msn.com/_Secure/0RwCqAngVtgVSswTh0eKSi*VJMZYZytpQaah0s9PPsHhJwE3YB cVQnO77nq9LvGzvTGrNo6xkuNJ5zHIPGFAIZjvYkoDOXc8fBV9 iEEmInQo/hair02.jpg?dc=4675435261144943305[/img]
Piper got his revenge, trashing the flower shop with a baseball bat and defeating Adrian Adonis at Wrestlemania. The moral of the story is, everyone always need an Ace.
Today I bought AACE (Ace Cash Express Inc) at 31.34. I will sell it in 4 to 6 weeks at 36.20. Here’s why I like AACE:
ACE Cash Express, Inc. is headquartered in Irving, Texas and is the largest owner, operator and franchiser of check-cashing stores in the United States. Founded in 1968, the Company had a total network of 1,184 stores, consisting of 974 company-owned stores and 210 franchised stores in 36 states and the District of Columbia as of December 31, 2003. ACE also operates self- service machines, which provide check-cashing or other financial services without the need for a service associate, at 20 company-owned store locations, 29 third-party bill-payment locations, and, during the tax season, ACE plans to place approximately 220 machines at H&R Block retail offices. ACE offers a broad range of check-cashing and other consumer financial services. ACE is one of the largest providers of MoneyGram wire transfer transactions, and it offers money orders, bill payment services, and prepaid local and long distance telecommunication services. Small, short-term consumer loans are also available to customers at various ACE company-owned stores. The No. 2 player is Dollar Financial, a private firm with close to 300 company-owned stores. Ace clearly is the gorilla!
AACE’s stock is up over 270% in the last 52 weeks yet its PE still is a very affordable 22. The price momentum exhibited over this climb is nothing short of astounding. The r^2 of a time series regression for the last 12 months is an extraordinary 0.88. What’s even more amazing is its r^2 for the last 6 months, which is 0.93. That’s almost a straight line going up!! Through all of the world and economic turmoil, all AACE stock has done is to keep going up!
Ace caters to families with an average yearly income of $35,000, and that often don't have a bank account. Many often need quick access to small amounts of cash. So say you don’t have a credit card and you’re getting paid at the end of next week. You finally get this hot girl to go out on a date with you, but you don’t have any cash and you can’t wait until the end of next week! Ace offers small payday loans averaging $200 in exchange for a check that's deposited at the end of the loan period.
A surprising 15% of U.S. households don't have checking accounts.
Many people simply have given up all hope of managing the funds in an account, having bounced checks repeatedly. Others can't justify the monthly and per-check fees, given that they're living paycheck to paycheck.
I remember when I used to work at the plant. The one plant guy would take everyone’s paycheck and go to the local savings bank and literally “cash” everyone’s check. He’d drive back to the plant with 20 separate envelopes filled with money. ACE company-owned stores cashed 3.3 million checks, resulting in check-cashing fees of $28.8 million, a 6.7 percent increase from $27.0 million in the second quarter of fiscal 2003.
That’s how a lot of people live. They don’t have checking accounts or credits cards. They live check to check. The way they pay bills is to take their cash to an ACE store and have ACE pay the bills for them…for a fee of course! Ace gets almost a buck a payment! Banks offer a similar service to account holders who want to pay their bills online using their PCs. The difference is that Ace's target customers are unlikely to have a bank account, much less a PC.
Electronic payment services aren't entirely new to Ace. It already offers such services to customers of companies that sign partnerships with Ace. Its partners include PrimeCo Personal Communications, Texas Utilities Electric Co., Lone Star Gas and Bell South. In Texas, Ace handles 90,000 bills per month for TU Electric and about 50,000 for Lone Star Gas. And it expects to process more than 600,000 payments over the next 12 months for PrimeCo. Ace acts as the payment window for these companies. Their customers can come into an Ace office and pay specific bills covered under contract. By directing their customers to Ace, the partner firms can close their in-house payment offices and cut costs. Consistent with many American trends, this outsourcing is clearly the way to go.
Some of Ace’s customers do have checking accounts. Though they may completely mismanage them. Another way Ace makes money is its post-dated check, or payday loan product, which is a cash advance secured by a check written for a larger sum. It is designed to assist customers who have insufficient funds in their accounts. A customer in need of $50, for example, might write Ace a post-dated check for $60. These fees are less than what would happen if the customer bounced a check, so they don’t mind paying them.
Ace has been growing their business organically by simply adding locations. Each store pays out in about 3 years, which is a pretty good return, considering Ace’s weighted average cost of capital.
So how does this translate to moolah? In the last 4 years, ACE has grown their revenue by over 28% per year, with earnings climbing at a rate of 15.7% over the same period. Guess what? Their business model works. It has been working. With their simple plans for expansion growth, it will continue to work.
If we assume initial earnings of $14.6 million grow at a rate of 15.71%, and we discount those future earnings at a rate of 15.00%, we arrive at a net present value for the company's next 10 years of earnings of $151 million. To account for potential earnings beyond the 10th year, we estimate a growth rate of 6.00%, a discount rate of 12.00%, and we arrive at a continuing value of $274 million. To complete the calculation we add these two figures together, subtract the long-term debt for AACE ($32.2 million), and divide by the outstanding shares (10.7 million) to get a per share intrinsic value of $36.81.
ANALysts expect AACE to make $1.54/share in fiscal 2004. Don’t make me laugh! My stomach is killing me from laughing so much. $$$MR. MARKET$$$ sees AACE baby making $1.67 for fiscal 2004 on revenues of $257 million. At today’s PE of 22, this takes the share price to $36.81, right about where I will be selling it. Shoot..I did it again! Remember, these guys have blasted…BLASTED!...earnings estimates quarter after quarter after quarter. Now that AACE has provided earnings guidance to Wall Street, you think they intend on missing their numbers?? Don’t make me LAUGH!
What makes AACE work so well? Start with a ROE of 16.6% vs. S&P 500 average 9.5%. Add a price to cash flow of 13.3 vs. S&P 500 of 18.2 . Top it off with a gross margin of 37%. Its cash and receivables on its balance sheet continue to grow as its total liabilities shrink. With all of the cash that has been piling in, they have been buying down their debt. This stock makes money in a low risk business..and it’s still cheap! Each store is its own separate little profitable business, catering to its own niche geographical demographic. AACE keeps adding stores, and keeps replicating this business model in town after town. ACE secured commitments to open 12 more franchised stores over the next five years, bringing its five-year commitment to a total of 104. Year-to-date, ACE has opened 10 company-owned stores and executed leases for another 31 stores. Of the 31 stores leased but not yet open, 18 are currently under construction and 13 are in the permitting process. An additional 24 leases for company-owned stores are being negotiated. ACE remains committed to meeting the goal of adding 500 stores to the ACE network during the next five years.
AACE has been seeing stronger than expected same store revenue increases in its core business of check cashing, stronger than expected increases in same store loan fees and interest, and lower interest expense due to more efficient cash management of the Company's revolving line of credit.
I’m not the only person who likes this stock. Fidelity owns over 9% of it in their low Priced Stock Fund. The way AACE stock is moving, Fidelity may have to put it in a different fund!
Here’s what the boss had to say:
"We are very pleased with our growth and progress during the past six months. Our focus on an operational excellence model continues to pay off with consistent improvements," said Donald H. Neustadt, chief executive officer of ACE. "And I believe ACE is well-positioned for future growth as our integrated technology and transaction processing capabilities allow us to easily add stores to our nationwide network without compromising the quality service our customers expect."
ACE Cash Express, Inc. is ranked the #1 franchise in the check-cashing category by Entrepreneur Magazine. In addition, ACE made the "Top 100 Franchises List" ranking 59th among the 500 franchise companies rated. This is the 6th consecutive year that the Company has ranked first in its industry.
"I am pleased to be a part of not only the top franchise in our industry, but one of the top 100 franchises in the nation," said Marty Mazer, Divisional Vice President of Franchise. "We have sold franchises to a diverse set of entrepreneurs, many of which own other franchises or provide services which compliment our business. ACE offers franchisees a great opportunity to succeed in this industry and we are very excited about growing the franchise business." Boy, once people see how easy it is to make a buck cashing checks, you’ll see an ACE next to ever Burger King!
Over the past year, ACE opened 32 franchises and has signed agreements to open 105 more over the next five years. As of September 30, 2003, ACE had 206 franchised locations out of its 1,174 total store network.
Watch out for Hot Rod to make his return to the squared circle. By the way, Cowboy Bob Orton’s son, Randy, has a featured match against Mick Foley at Wrestemania this month.
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