Aaron Rents, Inc.

Aaron Rents, Inc. (RNT) recently raised 2009 guidance as the rental business remains strong. The company has surprised on estimates 3 out of the last 4 quarters by an average of 9.01%. RNT has a forward P/E of 13.54.

Company Description

Aaron Rents operates more than 1,535 stores in 48 states and Canada that offer affordable rental payment plans on a variety of merchandise, including home appliances and electronics, to moderate-income customers.

The company operates under the names Aaron's Sales and Lease Ownership, RIMCO Custom Wheels Tires Accessories and More, Aaron's Office Furniture and MacTavish Furniture Industries, which operates 16 fulfillment centers and 11 manufacturing plants.

All of the production of MacTavish is shipped to Aaron Rents stores. It manufactured approximately $73 million in furniture and bedding in 2007.

Aaron Raises 2009 Guidance

The company expanded in the fourth quarter of 2008, acquiring all of the assets of Rosey Rentals, L.P., which had 35 stores in 6 states. Additionally, the company purchased the accounts of 18 stores from several competitors. The company also merged 20 of its RIMCO stores into existing Aaron's stores and is re-examining the wheels and rims concept.

On Dec 22, Aaron announced it was maintaining its 2008 earnings guidance in the range of $1.60 to $1.65 per share. But the company was bullish about 2009 as it expects overall store growth to be 5% to 9% higher than the store base at the end of 2008. The company said it will be net store growth after opening a combination of Company-operated and franchised stores.

Given the current strength of the business, Aaron raised 2009 earnings guidance to a range of $1.70 to $1.85 from $1.65 to $1.80.

Consenus Estimates Rise

Given the company's guidance, consensus estimates have been rising. 2008 consensus estimates are up $1.62 from $1.57 in the last 30 days, which is in the middle of the forecast. 2009 consensus estimates are also up to $1.75 from $1.71 in the last 30 days.

Analysts expect 5-year earnings growth of 10.5%. Aaron is scheduled to report fourth-quarter and 2008 full-year earnings on Feb 17.

Value Fundamentals

Aaron Rents is a Zacks #1 Rank (strong buy) stock. It has a forward P/E of 13.54. Its price-to-book is 1.85. The company has a solid 5-year return on equity (ROE) of 14.05%. As a bonus, RNT pays a dividend, with a current yield of 0.30%.