CCV
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Over the last five years, Cash Converters International (ASX:CCV) has recovered from pandemic-era disruptions to grow its revenue and stabilize profitability. Annual revenue has expanded from roughly $201 million up to nearly $377 million, while net profit rebounded to around $24.48 million in FY2025, supported by steady loan book growth and store acquisitions. [1, 2, 3, 4, 5]
Profit and Revenue Trends
- Revenue Growth: Scaled from $201.3 million (FY2021) to approximately $377.4 million (Trailing Twelve Months), driven by strong personal and vehicle finance demand. [1, 2, 3]
- Net Profit: Swung from earlier volatility and occasional losses back to consistent profitability, posting a net income of $24.48 million in FY2025 and around $22.47 million over the last 12 months. [1, 2, 3]
- Margins: Net profit margins normalized in the mid-single digits (approx. 5.5% to 7.2%). [1]
Debt and Capital Structure
- Total Debt: Maintained a moderate funding structure to support its lending operations, with combined short-term and long-term borrowings fluctuating around $200 million to $215 million. [1, 2]
- Debt-to-Equity: Ranged between 0.75 and 1.02 over recent years, reflecting typical leverage used to fund consumer loan books. [1]
- https://stockanalysis.com/quote/asx/CCV/financials/ratios/
Return on Equity (ROE) & Efficiency
- ROE Recovery: Rebounded from negative territory during pandemic lows to a healthier ~11.15% in FY2024–FY2025, sitting around 9.5% recently.
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Over the last 10 years, the Price-to-Earnings (P/E) ratio for Cash Converters International Limited (ASX: CCV) has experienced high volatility, fluctuating from deeply negative values during periods of net statutory losses to peaks above 12x during periods of stable profitability. As of August 2026, CCV trades at a trailing P/E ratio of approximately 9.3x to 10.5x. [1, 2, 3]
Historical Annual P/E Ratios (2016–2025)
The table below breaks down the annual fiscal year P/E ratios for ASX:CCV over the last decade according to historical financial data compiled by Wisesheets and Investing.com: [1]
| Fiscal Year | P/E Ratio | Key Drivers & Financial Context |
|---|---|---|
| 2025 | 7.14x to 8.54x | Higher statutory NPAT (~$24.5M) compressed the multiple as earnings recovered solidly. |
| 2024 | 6.83x to 7.55x | Improved core earnings offset by minor abnormal items; low single-digit P/E relative to market. |
| 2023 | -1.41x | Skewed negative due to non-cash class action settlement impacts and structural statutory adjustments. |
| 2022 | 12.78x | Peaked over the 5-year medium term as share prices recovered out of COVID-19 lows faster than trailing earnings. |
| 2021 | 6.57x to 7.40x | Strong operational cash flows during pandemic-driven credit demands normalized multiples. |
| 2020 | -10.29x | Negative earnings reflecting impairment charges and COVID-19 transaction disruptions. |
| 2019 | -59.26x | Hit a 10-year low due to heavy regulatory compliance costs and massive restructuring provisions. |
| 2018 | 6.81x | A period of steady operational metrics following earlier regulatory compliance updates. |
| 2017 | 7.43x | Subdued multiples following extensive class action remediation liabilities. |
| 2016 | -18.91x | Negative due to significant regulatory fines from ASIC regarding small-amount lending practices. |
3 Key Valuation Insights
- Macro Mean Discrepancies: Due to sporadic, heavily negative earnings years (2016, 2019, 2020, 2023), the literal 10-year arithmetic mean P/E sits at roughly -4.16x. However, the 10-year median P/E when profitable rests between 6.6x and 7.6x, indicating that the stock structurally trades as a low-multiple, deep-value asset. [1, 3]
- Discount to Broader Market: CCV consistently trades at a significant discount to the wider Australian market. Its historical P/E relative to the ASX averages roughly 48% to 52% of the market multiple, meaning it trades at roughly a 50% discount to average ASX industrials. [1]
- Current Yield Alignment: Because the stock maintains a compressed P/E ratio under 10x, it features a highly elevated historical dividend yield generally hovering between 6% and 9%, fully franked
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For Cash Converters International (ASX:CCV), exact year-by-year 10-year tracking of Return on Invested Capital (ROIC) versus Weighted Average Cost of Capital (WACC) is not published as a consolidated historical table by financial data providers. However, current live metrics indicate an ROIC of approximately 5.59% to 8.17% against a WACC of roughly 4.09% to 7.57%, showing that the company's recent return profile hovers near or moderately above its cost of capital. [1, 2, 3]
Understanding ROIC vs. WACC for CCV
- Value Creation Spread: A company creates economic value when its ROIC exceeds its WACC. [1]
- Historical Context: Over the past decade, Cash Converters has navigated major regulatory changes in Australian consumer credit, shifts away from legacy payday and vehicle financing products, and store network consolidations, causing historical returns on capital to fluctuate generally in the double-digit or high single-digit range (historical return on capital reported around 11%–12% in stable periods). [1, 2, 3, 4, 5]
- Current Estimates: Recent tracking places ROIC at ~5.6%–8.2% and WACC at ~4.1%–7.6%, maintaining a modest positive or neutral spread as the business executes its strategic turnaround
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Buffett analysis
An analysis of Cash Converters International Limited (ASX: CCV) reveals a steady micro-cap business that operates like a balance-sheet lender but falls short of the premier profitability criteria popularized by Warren Buffett. [1]
Historically, CCV exhibits a low but stable Return on Equity (ROE), high dividend payouts, and an aggressive corporate transformation strategy that shifts its capital from lending books to physical brick-and-mortar storefront acquisitions. [1]
1. Historical Return on Equity (ROE) Trends
From 2024 through 2026, CCV's ROE hovered in the high single digits to low double digits: [1]
- FY 2024: 10.0%
- FY 2025: 9.5%
While consistent, this trajectory is slightly compressing. This trend reflects an expansion in Shareholders' Equity (growing from $211.4M in FY24 to $253.8M in FY26) outpacing its underlying Net Profit After Tax (NPAT) growth. [1]
2. Capital Allocation & Buffett Benchmarks Comparison
Warren Buffett prefers high-quality, wide-moat businesses that generate massive cash flows with minimal capital requirements. Reviewing CCV through standard Buffett benchmarks highlights major points of divergence:
| Buffett Benchmark Metric | Buffett Minimum Target | Cash Converters (ASX: CCV) Status |
|---|---|---|
| Consistent ROE | > 15% sustainably | Fails. Stagnates between 8% – 10%. |
| Debt Coverage | Paid from < 3–4 years of Net Earnings | Passes. Total long-term debt of $135.1M against ~$20M NPAT is roughly 6.8x earnings. However, as a balance sheet lender, debt functions directly as inventory to generate credit revenue. |
| Capital Retained Efficiency | High retention to compound organically | Fails. Operates with an aggressive 61% – 63% payout ratio, choosing to distribute cash as dividends rather than fully reinvesting inside the company. |
| Price-to-Book Disconnect | High premium due to intangible economic moats | Fails. Trades at a persistent Price-to-Tangible-Book (P/TBV) discount of ~0.76x. The market discounts its book value due to its lower-return profile. |
3. Key Capital Decisions: The "De-franchising" Pivot
Instead of using capital to purely scale its digital consumer loan book, CCV has actively executed a de-franchising capital strategy. [1]
- The Strategy: The company is utilizing its free cash reserves to buy back older franchise-operated stores in Australia, New Zealand, and the UK. [1]
- Valuation Framework: Management typically targets these acquisitions at highly disciplined valuation multiples of 3.5x to 4.5x earnings. [1]
- The Buffett View: While buying predictable earnings at less than 5x PE satisfies Buffett's value-investing mandates, the localized pawn-broking/payday sector lacks the immense, unconstrained scalability of a true "Buffett compounder."
The Strategic Trade-off
CCV is structured more like an income-generator than an compounding vehicle. With a high forward dividend yield floating around 7.2% – 7.5%, capital allocation favors returning money directly to shareholders over retaining it to compound thin-margin equity returns. For value investors, the principal margin of safety rests in the 20% asset discount relative to its fundamentally derived tangible book value, rather than a strong structural moat. [1, 2, 3]
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