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Bull Of The Day: Rent-A-Center (RCII)

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Rent-A-Center (RCII - Free Report) is the stock that has been on the Zacks Rank #1 (Strong Buy) list for the longest amount of time.  The stock has been a  Zacks Rank #1 (Strong Buy) since July 31 and that is saying something.  August and September were relatively good months, but staying strong throughout October and midway through November is something else.  RCII is finally the Bull of the Day.

Description

A rent-to-own industry leader, Plano, Texas-based, Rent-A-Center, Inc., is focused on improving the quality of life for its customers by providing them the opportunity to obtain ownership of high-quality, durable products such as consumer electronics, appliances, computers, furniture, and accessories, under flexible rental purchase agreements with no long-term obligation. Rent-A-Center Franchising International, Inc., a wholly owned subsidiary of the Company, is a national franchiser of the rent-to-own stores operating under the trade names of Rent-A-Center, ColorTyme, and RimTyme.

Earnings History

One reason RCII has been a Zacks Rank #1 (Strong Buy) for the last 3 and a half months is that it has posted back to back beats of the Zacks Consensus Estimate.  

It helps that these beats came after some pretty big misses.  The misses were negative earnings surprises of 200% and 485%.

Earnings Estimates

You would think that being a Zacks Rank #1 (Strong Buy) for all that time would mean you have some pretty strong estimate revisions.  RCII has some moves, but they are not as strong as I thought they would be.

The 2018 Zacks Consensus Estimate moved from $0.72 to $0.84 over the last 90 days, which is really good, but not over the top great.

The 2019 Zacks Consensus Estimate has more or less stood still over that same time period.  It kicked higher by one cent, and is now at $1.23.

The implied earnings growth is nice to see, but that isn't a big factor in the Zacks Rank.

Valuation

The valuation for RCII is pretty good, with a 17x forward PE and price to book multiple below 3x at 2.7x.  Revenue growth is struggling... but with the idea of a higher minimum wage, you have to think that growth is on the way for a play like this.

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