We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Here's Why Rent-A-Center (RCII) Has Gained 70% in Past 6 Months
Read MoreHide Full Article
Rent-A-Center, Inc. looks appealing on strength in its resilient model, continuous expansion of technology and focus on innovation. The company is making digital investments and is on track to widen its target-customer demographic and retain customers. Additionally, management is keen on enhancing its omni-channel platform to offer customers a seamless experience across channels, markets, products and brands. Strength in its Preferred Lease wing further acts as a catalyst. Impressively, the Plano, TX-based company’s shares have surged 70.4% versus the industry’s 17.6% rally over the past six months.
Additionally, analysts look optimistic about the company. For 2021, the Zacks Consensus Estimate of $3.78 for earnings and $2.98 billion for revenues suggest year-over-year growth of 10.1% and 6.3%, respectively. The VGM Score of A for this Zacks Rank #2 (Buy) company further speaks of its potential.
Let’s Delve Deeper
Rent-A-Center is one of the major omni-channel lease-to-own providers for credit-constrained consumers. The company has been expanding its e-commerce offerings and mobile applications, and leveraging its cloud-based point-of-sale platform to manage orders more efficiently, lower losses and cut operating costs. Notably, the company believes that virtual lease-to-own is an important underserved opportunity and hence targets accomplishing $1.2 billion in Preferred Lease revenues by 2022-end. Further, it said that e-commerce penetration is likely to reach 30-40% over the next two years. Apparently, e-commerce transactions at rentacenter.com increased 71% during the third quarter of 2020.
The company’s Preferred Lease segment is benefiting from higher credit tightening amid such a competitive landscape. Revenues at Preferred Lease grew 9.3% during the last reported quarter buoyed by virtual retail-partner growth and higher invoice volumes. The segment is expected to keep driving the company’s overall performance. Going forward, the segment is also likely to benefit from the company’s strategic buyouts. Recently, management agreed to buy Acima Holdings LLC in a cash-and-stock transaction worth $1.65 billion. The deal is likely to conclude in the first half of 2021.
Markedly, Acima is a growing and profitable lease-to-own (LTO) fintech company. Notably, this buyout will enhance the company’s virtual LTO offerings. The combined business will be reported under the Preferred Lease segment. Through this, Rent-A-Center will be able to provide a frictionless LTO experience to its retail partners and customers through an integrated omni-channel strategy. It will expand the company’s virtual partner base and efficiently cater to consumers with a flexible LTO approach.
Furthermore, Rent-A-Center’s share-friendly moves are encouraging. Recently, the company’s board raised its quarterly cash dividend per share to 31 cents from 29 cents for the first quarter of 2021. The increased dividend is equivalent to a current annualized dividend rate of $1.24 a share versus the prior rate of $1.16. It has a dividend payout of 40.1%, dividend yield of 2.9% and free cash flow yield of 12.6%. With an annual free cash flow return on investment of 41.6%, ahead of the industry’s 19.3%, the dividend payment is likely to be sustainable.
BJ's Wholesale Club (BJ - Free Report) has a long-term earnings-growth rate of 15.8% and a Zacks Rank #2.
Crocs (CROX - Free Report) , also a Zacks Rank #2 stock, has a long-term earnings-growth rate of 15%.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
Image: Bigstock
Here's Why Rent-A-Center (RCII) Has Gained 70% in Past 6 Months
Rent-A-Center, Inc. looks appealing on strength in its resilient model, continuous expansion of technology and focus on innovation. The company is making digital investments and is on track to widen its target-customer demographic and retain customers. Additionally, management is keen on enhancing its omni-channel platform to offer customers a seamless experience across channels, markets, products and brands. Strength in its Preferred Lease wing further acts as a catalyst. Impressively, the Plano, TX-based company’s shares have surged 70.4% versus the industry’s 17.6% rally over the past six months.
Additionally, analysts look optimistic about the company. For 2021, the Zacks Consensus Estimate of $3.78 for earnings and $2.98 billion for revenues suggest year-over-year growth of 10.1% and 6.3%, respectively. The VGM Score of A for this Zacks Rank #2 (Buy) company further speaks of its potential.
Let’s Delve Deeper
Rent-A-Center is one of the major omni-channel lease-to-own providers for credit-constrained consumers. The company has been expanding its e-commerce offerings and mobile applications, and leveraging its cloud-based point-of-sale platform to manage orders more efficiently, lower losses and cut operating costs. Notably, the company believes that virtual lease-to-own is an important underserved opportunity and hence targets accomplishing $1.2 billion in Preferred Lease revenues by 2022-end. Further, it said that e-commerce penetration is likely to reach 30-40% over the next two years. Apparently, e-commerce transactions at rentacenter.com increased 71% during the third quarter of 2020.
The company’s Preferred Lease segment is benefiting from higher credit tightening amid such a competitive landscape. Revenues at Preferred Lease grew 9.3% during the last reported quarter buoyed by virtual retail-partner growth and higher invoice volumes. The segment is expected to keep driving the company’s overall performance. Going forward, the segment is also likely to benefit from the company’s strategic buyouts. Recently, management agreed to buy Acima Holdings LLC in a cash-and-stock transaction worth $1.65 billion. The deal is likely to conclude in the first half of 2021.
Markedly, Acima is a growing and profitable lease-to-own (LTO) fintech company. Notably, this buyout will enhance the company’s virtual LTO offerings. The combined business will be reported under the Preferred Lease segment. Through this, Rent-A-Center will be able to provide a frictionless LTO experience to its retail partners and customers through an integrated omni-channel strategy. It will expand the company’s virtual partner base and efficiently cater to consumers with a flexible LTO approach.
Furthermore, Rent-A-Center’s share-friendly moves are encouraging. Recently, the company’s board raised its quarterly cash dividend per share to 31 cents from 29 cents for the first quarter of 2021. The increased dividend is equivalent to a current annualized dividend rate of $1.24 a share versus the prior rate of $1.16. It has a dividend payout of 40.1%, dividend yield of 2.9% and free cash flow yield of 12.6%. With an annual free cash flow return on investment of 41.6%, ahead of the industry’s 19.3%, the dividend payment is likely to be sustainable.
Other Solid Consumer Discretionary Bets
SP Plus (SP - Free Report) has a long-term earnings-growth rate of 10% and sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
BJ's Wholesale Club (BJ - Free Report) has a long-term earnings-growth rate of 15.8% and a Zacks Rank #2.
Crocs (CROX - Free Report) , also a Zacks Rank #2 stock, has a long-term earnings-growth rate of 15%.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
Click here for the 6 trades >>