A very solid bounce back for the market this week has many investors feeling invincible. Over the last couple of trading days, the dartboard approach would have led to solid gains. By now, we all know that all good things come to an end. In this case, eventually the market is going to stop rewarding every stock out there. It will be become a vehicle of scrutiny. One way to avoid the market’s wrath is to bank on stocks with strong earnings trends. As long as earnings are moving up in a positive direction, a stock can go on an unbelievable run.
Stocks with have favorable Zacks Ranks are those with the strongest earnings trends. Like today’s Bull of the Day, Rent-A-Center (RCII - Free Report) . Rent-A-Center, Inc., together with its subsidiaries, leases household durable goods to customers on a rent-to-own basis. The company operates through four segments: Core U.S., Acceptance Now, Mexico, and Franchising. It offers durable products, such as consumer electronics; appliances; computers, including tablets; smartphones; wheels and tires; and furniture, including accessories under rental purchase agreements. The company also provides merchandise on an installment sales basis; and rent-to-own transaction to consumers who do not qualify for financing from the traditional retailer through kiosks located within retailer's locations.
The reason for the favorable Zacks Rank lies in the series of earnings estimate revisions to the upside for the current year. Over the last sixty days, six analysts have jacked up their estimates. The bullish moves among analysts have increased our Zacks Consensus Estimate from $1.82 to $2.12. Next year’s estimates have moved dramatically as well, jumping from $2.15 to $2.45. And this isn’t a company that over-promises and under delivers. Last quarter’s EPS beat came in nearly double analysts estimates calling for just 30 cents. The 59 cent print was the last in several earnings beats for the company going back four quarters in a row.
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