Rent-A-Center Inc. ( RCII - Analyst Report ) , one of the largest rent-to-own operators, is slated to report its first-quarter 2012 financial results on April 24. The current Zacks Consensus Estimate for the quarter stands at 84 cents per share, indicating an increase of 6.3% from the prioryear quarter's earnings. Revenue, as per the Zacks Consensus Estimate, is $807 million.

Fourth-Quarter Synopsis

Rent-A-Center’s fourth quarter earnings of 85 cents a share outdid the Zacks Consensus Estimate of 82 cents, and increased 19.7% from 71 cents earned in the prior-year quarter, driven by growth registered in its top-line.

The earnings also surpassed the higher end of management’s guidance range of 78 cents to 84 cents a share. On a reported basis, including one-time items, earnings came in at 83 cents a share, up from 49 cents delivered in the year-ago quarter.

Rent-A-Center’s total revenues, comprising store and franchise revenues, grew 8.9% to $737.5 million from the year-ago quarter. However, total revenues marginally fell short of the Zacks Consensus Estimate of $738 million.

Estimate Revisions Trend

Agreement

We do not see any major estimate revisions at this point. Among the 10 analysts covering the stock, one revised the estimate for the first quarter upward while none moved in the opposite direction in the last 30 days. For fiscal 2012, one analyst revised its estimate upwards, while none lowered.

Magnitude

The Zacks Consensus Estimate for the upcoming quarter inched up by a penny over the last 30 days. Most of the analysts remained constructive on the stock based on the company’s growth prospects and kept their estimates intact, in the absence of any major news having a direct or an indirect impact on the estimates.

Mixed Surprise History

With respect to earnings surprises, Rent-A-Center has topped as well as missed the Zacks Consensus Estimate over the last four quarters in the range of negative 7.1% to positive 3.7%. The average remained at negative 1.4%, indicating that the company has missed the Zacks Consensus Estimate by the same magnitude in the trailing four quarters.

Our Take

Rent-A-Center leverages an extensive network of stores to effectively penetrate into its target markets, which in turn, facilitates the company to genetare healthy sales and gain a competitive advantage over its competitors.

Despite a sluggish recovery in the economy, Rent-A-Center witnessed healthy demand for its products and services. The company now projects fiscal 2012 top-line growth between 7% and 10%, attributable to low single-digit jump in the core U.S.and more than $300 million contribution from RAC Acceptance. Management expects comparable-store sales between 2.5% and 4.5%. Earnings for fiscal 2012 are projected between $3.00 and $3.20 per share.

Moreover, Rent-A-Center’s business is seasonal in nature and typically generates stronger sales during the first quarter. These are characterized by federal income tax refunds, which are used by the company’s customers to exercise early purchase option on the existing rental agreements.

Currently, Rent-A-Center, which competes with Aaron’s Inc. ( AAN - Snapshot Report ) , holds a Zacks #2 Rank that translates into a short-term Buy recommendation.However, considering the fundamentals, we have a long-term Neutral rating on the stock.