Rent-A-Center, Inc. posted fourth-quarter 2016 loss of 23 cents a share that fared a penny better than the Zacks Consensus Estimate but fell substantially from earnings of 54 cents delivered in the year-ago period. Total revenue of $684.1 million declined 13.8% year over year and also came below the respective estimate of $688.2 million, marking the sixth straight quarter of sales miss.
Aggressive promotional activity, high delinquencies and recovery issues from technical snags and outages that occurred in the preceding quarter impacted the company’s final quarter results. Total revenue tumbled due to decline witnessed across the Core U.S., Acceptance Now, Mexico, and Franchising segments. The company’s waning top line and bottom line have been weighing on the stock’s performance.
Shares of this rent-to-own operator have underperformed the Zacks categorized industry in the past six months. In the period, the stock has declined 33.1%, while the Consumer Services – Miscellaneous industry has decreased 8.9%.
Comparable-store sales (comps) for the quarter dropped 9.6%, reflecting declines of 14.2% and 1.8% in the Core U.S. and Mexico segments, respectively, partly offset by a 1% increase noted at the Acceptance Now segment.
Delving Deeper
Revenue from the Acceptance Now segment dipped 1.7% from the prior-year quarter figure to $193.5 million.
Revenue from the Core U.S. segment slumped 17.6% to $472.9 million, owing to continued store base rationalization and dismal comps.
The Mexico segment’s revenue came in at $11.4 million, down 23.9% year over year – attributable to foreign currency headwinds, store closures and lower comps. Finally, total Franchising revenue plunged 23.2% to $6.2 million during the quarter.
Rent-A-Center’s adjusted EBITDA margin shriveled 780 basis points to 1.5%.
Store Update
At the end of the quarter, there was 2,463 Core U.S. locations, 1,431 Acceptance Now Staffed stores, 478 Acceptance Now Direct stores, 130 stores in Mexico and 229 Franchise stores.
Other Financial Aspects
Rent-A-Center, which shares space with McGrath Rentcorp (MGRC - Free Report) , AeroCentury Corp. and Aaron's, Inc. (AAN - Free Report) , ended the quarter with cash and cash equivalents of $95.4 million and net Senior debt of $186.7 million. The company lowered outstanding debt balance by $233.8 million in 2016. During 2016, the company generated $353.7 million as cash from operations, while incurring capital expenditures of $61.1 million.
Currently, Rent-A-Center carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Today, you are invited to download the full list of 220 Zacks Rank #1 """"Strong Buy"""" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 """"Strong Sells"""" and other private research. See these stocks free >>
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Rent-A-Center, Inc. posted fourth-quarter 2016 loss of 23 cents a share that fared a penny better than the Zacks Consensus Estimate but fell substantially from earnings of 54 cents delivered in the year-ago period. Total revenue of $684.1 million declined 13.8% year over year and also came below the respective estimate of $688.2 million, marking the sixth straight quarter of sales miss.
Aggressive promotional activity, high delinquencies and recovery issues from technical snags and outages that occurred in the preceding quarter impacted the company’s final quarter results. Total revenue tumbled due to decline witnessed across the Core U.S., Acceptance Now, Mexico, and Franchising segments. The company’s waning top line and bottom line have been weighing on the stock’s performance.
Shares of this rent-to-own operator have underperformed the Zacks categorized industry in the past six months. In the period, the stock has declined 33.1%, while the Consumer Services – Miscellaneous industry has decreased 8.9%.
Comparable-store sales (comps) for the quarter dropped 9.6%, reflecting declines of 14.2% and 1.8% in the Core U.S. and Mexico segments, respectively, partly offset by a 1% increase noted at the Acceptance Now segment.
Delving Deeper
Revenue from the Acceptance Now segment dipped 1.7% from the prior-year quarter figure to $193.5 million.
Revenue from the Core U.S. segment slumped 17.6% to $472.9 million, owing to continued store base rationalization and dismal comps.
The Mexico segment’s revenue came in at $11.4 million, down 23.9% year over year – attributable to foreign currency headwinds, store closures and lower comps. Finally, total Franchising revenue plunged 23.2% to $6.2 million during the quarter.
Rent-A-Center’s adjusted EBITDA margin shriveled 780 basis points to 1.5%.
Store Update
At the end of the quarter, there was 2,463 Core U.S. locations, 1,431 Acceptance Now Staffed stores, 478 Acceptance Now Direct stores, 130 stores in Mexico and 229 Franchise stores.
Other Financial Aspects
Rent-A-Center, which shares space with McGrath Rentcorp (MGRC - Free Report) , AeroCentury Corp. and Aaron's, Inc. (AAN - Free Report) , ended the quarter with cash and cash equivalents of $95.4 million and net Senior debt of $186.7 million. The company lowered outstanding debt balance by $233.8 million in 2016. During 2016, the company generated $353.7 million as cash from operations, while incurring capital expenditures of $61.1 million.
Currently, Rent-A-Center carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 """"Strong Buy"""" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 """"Strong Sells"""" and other private research. See these stocks free >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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