Aaron's Inc.

Aaron's Inc. (AAN - Snapshot Report), the retailer which provides rent-to-own plans for a variety of merchandise, posted a record first quarter as same store sales jumped 12.3%. Analysts expect year over year earnings growth of 26.42% as the company saw a 20% rise in customers in the first quarter.

Company Description

Aaron's operates more than 1,575 stores in 48 states and Canada that offer affordable rental payment plans on a variety of merchandise, including home appliances, office furniture and electronics, to moderate-income customers.

The company also operates under the MacTavish Furniture brand which manufactures furniture and bedding at 12 facilities in 5 states.

Aaron's Posts Record Revenue

On Apr 27, the company reported record first quarter results that saw revenue jump 15% to $474 million from $412.7 million a year ago. Same store sales were humming, gaining 12.3% year over year.

The number of customers at its stores and its franchisees stores soared by 20% over the year ago period as consumers had difficulty obtaining traditional credit and sought out Aaron's rent-to-own alternatives.

Earnings per share climbed 55% to 65 cents from 42 cents in the first quarter of 2008, easily surprising on analysts' estimates of 51 cents.

2009 Guidance Rises

The company is bullish about 2009 given the record first quarter results. Second quarter earnings are expected to be in the range of 45 to 50 cents.

For the full-year, guidance was raised to the range of $1.90 to $2.05 from $1.72 to $1.87 per share. The company expects new store growth between 5% to 9% over the store base at the end of 2008.

Earnings Estimates Jump

Given the optimistic guidance, covering analysts moved to raise estimates in the last 60 days. Second quarter consensus is at 48 cents which is right in the middle of the forecast range.

Full-year estimates rose 18 cents to $2.00 per share.

The company is expected to report second-quarter earnings on July 21.

Value Fundamentals

Aaron's is a Zacks #1 Rank (strong buy) stock. It has a forward P/E of 14.6. Its price-to-book is 1.95. The company has a solid 5-year return on equity (ROE) of 13.65%.

Additionally, Aaron's pays a small dividend with a yield of 0.20%.