Zacks Analyst Blog Highlights: Dollar Financial, CapitalSource, MasterCard, Aegon NV and Macy's Inc.

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Jan 10, 2011, 11:09 ET

CHICAGO, Jan. 10, 2011 /PRNewswire/ -- Zacks.com Analyst Blog features: Dollar Financial Corporation (Nasdaq: DLLR), CapitalSource Inc. (NYSE: CSE), MasterCard Inc. (NYSE: MA), Aegon NV (NYSE: AEG) and Macy's Inc. (NYSE: M).

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Here are highlights from Friday's Analyst Blog:

Dollar Financial Expands in U.K. (revised)

In an attempt to expand its payday lending business in U.K., Dollar Financial U.K. Ltd., a wholly owned U.K. subsidiary of Dollar Financial Corporation (Nasdaq: DLLR) has agreed to acquire Purpose U.K. Holdings Limited for $195 million.

Purpose is a provider of online payday loans, which operates under the brand PaydayUK in U.K. since 2003.

The deal is expected to complete in the next 90 days, which is subjective to closing conditions and regulatory approval. Further, the acquisition of Purpose would immediately add to the earnings of Dollar Financial, which will be reflected in the earnings outlook of 2010 that the company is expected to provide after the closure of the deal.

Besides U.K., the company has expanded its footprint in Mexico too. Dollar Financial is on track acquiring payday lenders outside the U.S., as the company is trying to curb its exposure to U.S. regulations, which targets at limiting the interest rates. The regulation has capped the interest rates on payday loans to 36% to support the low and middle income families.

Apart from acquiring payday lending businesses, Dollar Financial is vigorously pursuing its pawn lending business growth strategy across product and geography, primarily in highly regulated pawn lending markets such as Sweden and Finland.

Recently in December 31, the U.K. subsidiary of Dollar Financial, Dollar Financial U.K. Ltd., completed the acquisition of a leading pawn lending Scandinavian company, Sefina Finance AB, for approximately $73 million in cash. The Sefina acquisition is expected to be accretive immediately and Dollar Financial expects the deal to be reflective in its earnings outlook for 2011.

In April 2010, Dollar Financial acquired Suttons & Robertsons, the fourth-largest pawn-broking business in the UK, for £15 million with additional potential payments amounting to £2.5 million, over the next two years. Further, in August 2010, Dollar Financial agreed to buy Swedish Internet lending business Folkia Group AS for $28 million.

Overall, Dollar Financial has been tapping on this growing opportunity through mergers and acquisitions and we believe that the acquisition of Purpose will strengthen the position of the company as a leading provider of internet loans across U.K.

Moreover, Dollar Financial is expected to benefit from the solid management team of Purpose, along with its strong business and industry expertise, which will facilitate the expansion of the global internet lending platform, both within the U.K. as well as other countries in Europe and Canada.

Though the company is on a business shopping spree, risks related to its tax strategies, increased debt obligation and its increased international dependence continue to float on the surface. Nevertheless, good liquidity, exposure to a somewhat recession-proof sector and cost containment measures will drive growth in the future.

(Editor's Note: It was earlier stated that Dollar Financial competes with CapitalSource Inc. [NYSE: CSE] in the payday lender industry. We are re-issuing this blog to correct the mistake.)

MasterCard Gains Wukesong Rights

In an effort to expand its international business, MasterCard Inc. (NYSE: MA) has obtained the naming rights of Wukesong Arena in Beijing for a five-year period. Though the financial terms of the deal were not disclosed, it was decided that the arena will be re-named the MasterCard Center or Wanshida Zhongxin in China.

The Wukesong arena, which has a capacity of 18,000 seats, will become the first 2008 Olympic Games venue in China's sports and entertainment industry to be re-branded commercially. In addition, Bloomage International Investment Group will act as the owner of the Wukesong arena, and Aegon NV (NYSE: AEG) and the U.S. National Basketball Association (NBA) as consultants to run the arena.

The renaming will become official on January 21, and will combine the local ownership and know-how with the international event management expertise and sponsorship, in order to bring the world's best performers to Beijing.

The popular Cantonese pop singer Jacky Cheung is scheduled to perform at the launch of MasterCard Center, along with other renowned artists including the American rock band the Eagles and Hong Kong singer Aaron Kwok. Additionally, the Wukesong arena will host sports events like NBA basketball, table tennis, badminton and others.

Macy's Sales Up, Fixed on Outlook

Macy's Inc. (NYSE: M) recently posted sales for the five-week period ended January 1, 2011 that fell short of the analysts' expectation but reiterated its outlook.

Macy's comparable-store sales for December 2010 rose 3.9%, following an increase of 6.1% registered in November 2010 and reflecting a sharp improvement from a marginal increase of 1% witnessed in December 2009.

Management pointed that sales remained robust across Macy's and Bloomingdale's, despite unfavorable weather condition. Comparable-store sales for the holiday selling period (November/December) rose 4.6%.

Cincinnati, Ohio-based company, Macy's stated that year-to-date comparable-store sales grew by 4.7%.

Macy's said that total sales for December jumped 4.5% to $4,619 million from $4,422 million in the same month last year. Year-to-date, sales were up 6.6% to $23,695 million from $22,236 million in the comparable year-ago period.

Online sales, which include macys.com and bloomingdales.com, retained their growth momentum in December and soared 28.4% for the month under review, and were up 28.8% year-to-date. Macy's is seeking to expand both the Macy's and Bloomingdale's brands.

Macy's maintained its sales and earnings guidance. The company continues to expect comparable-store sales for fourth-quarter 2010 between 3.5% and 4.5%. Management hinted at fourth-quarter earnings in the range of $1.44 to $1.49 per share, translating into fiscal 2010 earnings of $1.96 to $2.01.

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