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.
Why Is Aaron's (AAN) Up 5.8% Since Last Earnings Report?
Read MoreHide Full Article
A month has gone by since the last earnings report for Aaron's Company, Inc. (AAN - Free Report) . Shares have added about 5.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Aaron's due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Aaron's reported solid fourth-quarter 2021 results, wherein the top and bottom lines beat the Zacks Consensus Estimate. A robust lease-to-own portfolio, a solid e-commerce business and a sturdy performance in GenNext stores aided the quarterly results. The company remains on track with its GenNext real estate strategy, which is performing well. Notably, Aaron’s opened 30 GenNext stores in the fourth quarter. The company expects to open 120 such stores by 2022.
Management noted that it entered a deal to acquire appliance and electronics retailer, BrandsMart. With the buyout, Aaron’s will be able to offer high-quality furniture, appliances, electronics, and other home goods on affordable lease and retail purchase options to its customers. The move is also expected to strengthen AAN’s market position and help expand the customer base.
Q4 Highlights
Aaron's delivered adjusted earnings of 60 cents per share, which surpassed the Zacks Consensus Estimate of 37 cents. However, the bottom line declined 24.1% year over year from 79 cents per share reported in the prior-year quarter. On a GAAP basis, the company recorded earnings of 50 cents per share, indicating a sharp rise from 8 cents reported in the year-ago quarter.
Consolidated revenues rose 3.4% to $444.8 million and beat the Zacks Consensus Estimate of $426 million. The uptick is mainly due to improved quality and the size of its lease portfolio, which somewhat offset reduced customer payment activities, and the impacts of the net closure of 72 franchised stores in 15 months ended Dec 31, 2021.
Same-store revenues rose 4.8% in the fourth quarter, driven by improved lease portfolio size, which somewhat offset reduced lease renewal rates. E-commerce lease revenues were up 13%, accounting for 14.6% of total revenues.
Breaking up the components of consolidated revenues, we note that lease and retail revenues grew 4.6% in the reported quarter to $404.8 million. Non-retail sales, which mainly include merchandise sales to franchisees, rose 2.4% year over year to $33.7 million. Franchise royalties and fees in the quarter slumped 39.4% to $6.3 million from the year-ago quarter.
Aaron’s franchisee revenues decreased 18.3% year over year to $80 million on reduced franchised locations. Meanwhile, same-store revenues for franchised stores grew 4.3% year over year. Revenues and customers of franchisees are not deemed as revenues and customers of the company.
Aaron’s adjusted EBITDA declined 23% year over year to $41.3 million. Adjusted EBITDA margin contracted 320 basis points (bps) to 9.3% in the reported quarter due to reduced lease renewal rates, a rise in operating costs and potential growth in write-offs.
Financial Position
The company ended the quarter with cash and cash equivalents of $22.8 million, and shareholders’ equity of $718.2 million. In 2021, it generated cash from operations of $136 million. Capital expenditure is expected to be $100-$125 million for 2022.
In the reported quarter, the company bought back 820,338 shares of Aaron's common stock worth $20.7 million. In 2021, it repurchased 3,571,812 shares for $103.1 million. Currently, the company has shares worth $46.9 million remaining to be bought back under its existing share repurchase program of $150 million.
The board also approved a quarterly dividend of 10 cents per share, which was paid out on Jan 4. On Feb 21, 2022, AAN approved a dividend hike of 12.5%. It will now pay a dividend of 11.25 cents on Apr 5 of shareholders’ records as of Mar 17.
Outlook
Despite the solid results, management provided a drab 2022 view. For 2022, the company anticipates revenues of $1.775-$1.825 billion, which compares unfavorably with $1,845.5 million reported in 2021. Same-store revenues are forecast to decline 3-1%. Adjusted EBITDA is likely to be $180-$190 million. It also expects a free cash flow of $45-$50 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -7.18% due to these changes.
VGM Scores
Currently, Aaron's has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Aaron's has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Why Is Aaron's (AAN) Up 5.8% Since Last Earnings Report?
A month has gone by since the last earnings report for Aaron's Company, Inc. (AAN - Free Report) . Shares have added about 5.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Aaron's due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Aaron's Q4 Earnings & Revenues Beat, Soft View Hurts
Aaron's reported solid fourth-quarter 2021 results, wherein the top and bottom lines beat the Zacks Consensus Estimate. A robust lease-to-own portfolio, a solid e-commerce business and a sturdy performance in GenNext stores aided the quarterly results. The company remains on track with its GenNext real estate strategy, which is performing well. Notably, Aaron’s opened 30 GenNext stores in the fourth quarter. The company expects to open 120 such stores by 2022.
Management noted that it entered a deal to acquire appliance and electronics retailer, BrandsMart. With the buyout, Aaron’s will be able to offer high-quality furniture, appliances, electronics, and other home goods on affordable lease and retail purchase options to its customers. The move is also expected to strengthen AAN’s market position and help expand the customer base.
Q4 Highlights
Aaron's delivered adjusted earnings of 60 cents per share, which surpassed the Zacks Consensus Estimate of 37 cents. However, the bottom line declined 24.1% year over year from 79 cents per share reported in the prior-year quarter. On a GAAP basis, the company recorded earnings of 50 cents per share, indicating a sharp rise from 8 cents reported in the year-ago quarter.
Consolidated revenues rose 3.4% to $444.8 million and beat the Zacks Consensus Estimate of $426 million. The uptick is mainly due to improved quality and the size of its lease portfolio, which somewhat offset reduced customer payment activities, and the impacts of the net closure of 72 franchised stores in 15 months ended Dec 31, 2021.
Same-store revenues rose 4.8% in the fourth quarter, driven by improved lease portfolio size, which somewhat offset reduced lease renewal rates. E-commerce lease revenues were up 13%, accounting for 14.6% of total revenues.
Breaking up the components of consolidated revenues, we note that lease and retail revenues grew 4.6% in the reported quarter to $404.8 million. Non-retail sales, which mainly include merchandise sales to franchisees, rose 2.4% year over year to $33.7 million. Franchise royalties and fees in the quarter slumped 39.4% to $6.3 million from the year-ago quarter.
Aaron’s franchisee revenues decreased 18.3% year over year to $80 million on reduced franchised locations. Meanwhile, same-store revenues for franchised stores grew 4.3% year over year. Revenues and customers of franchisees are not deemed as revenues and customers of the company.
Aaron’s adjusted EBITDA declined 23% year over year to $41.3 million. Adjusted EBITDA margin contracted 320 basis points (bps) to 9.3% in the reported quarter due to reduced lease renewal rates, a rise in operating costs and potential growth in write-offs.
Financial Position
The company ended the quarter with cash and cash equivalents of $22.8 million, and shareholders’ equity of $718.2 million. In 2021, it generated cash from operations of $136 million. Capital expenditure is expected to be $100-$125 million for 2022.
In the reported quarter, the company bought back 820,338 shares of Aaron's common stock worth $20.7 million. In 2021, it repurchased 3,571,812 shares for $103.1 million. Currently, the company has shares worth $46.9 million remaining to be bought back under its existing share repurchase program of $150 million.
The board also approved a quarterly dividend of 10 cents per share, which was paid out on Jan 4. On Feb 21, 2022, AAN approved a dividend hike of 12.5%. It will now pay a dividend of 11.25 cents on Apr 5 of shareholders’ records as of Mar 17.
Outlook
Despite the solid results, management provided a drab 2022 view. For 2022, the company anticipates revenues of $1.775-$1.825 billion, which compares unfavorably with $1,845.5 million reported in 2021. Same-store revenues are forecast to decline 3-1%. Adjusted EBITDA is likely to be $180-$190 million. It also expects a free cash flow of $45-$50 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -7.18% due to these changes.
VGM Scores
Currently, Aaron's has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Aaron's has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.