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Why the Cash Converters International Ltd share price is up 20% in the past month

The Cash Converters International Ltd (ASX: CCV) share price has soared 20 since June 19, 2017, although the shares are still trading down compared to the start of this year.

In March, Cash Converters was removed from the S&P/ASX 300 (Index: ^AXKO) (ASX: XKO), possibly resulting in a number of fund managers forced to sell out of the stock. That saw the company’s share price hit 52-week lows.

Changes to management announced in May included a new chief financial officer and new general counsel. Since then, there’s been no official news that could move the share price significantly which suggests external forces are pushing up the share price.

Cash Converters owns a number of retail pawnbroking stores and also provides small loans to retail customers.

The company expects to report a net profit after tax for the 2017 financial year (FY17) at the lower end of between $20 and $23 million, after delivering $11.5 million in the first half. While that was a fall of 28% compared to the previous year, the company is in a transition away from unsustainable business practices and transforming its UK business into a master franchisor model.

The bargain hunters might be moving in, but Cash Converters didn’t pay a dividend for the first half of FY17, and is unlikely to pay a dividend when it reports its full year FY17 results in August 2017. But it seems some of those investors expect the company to start paying dividends soon and have pushed the share price up.

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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