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.
Aaron's (AAN) Up 1.3% Since Last Earnings Report: Can It Continue?
Read MoreHide Full Article
It has been about a month since the last earnings report for Aaron's Company, Inc. (AAN - Free Report) . Shares have added about 1.3% in that time frame, underperforming 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 its most recent earnings report in order to get a better handle on the important catalysts.
Aaron's Q1 Earnings Beat Estimates, Revenues Up Y/Y
Aaron's delivered first-quarter 2023 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate. While the top line increased year over year, the bottom line declined.
Aaron's delivered adjusted earnings of 66 cents per share, outpacing the Zacks Consensus Estimate of 28 cents. However, the bottom line declined 24.1% year over year from 87 cents per share reported in the prior-year quarter. On a GAAP basis, AAN reported earnings of 41 cents per share versus earnings of 68 cents in the year-ago quarter.
Quarter in Detail
Consolidated revenues grew 21.5% to $554.4 million, driven by gains from the BrandsMart buyout, somewhat offset by weak lease revenues and fees, and drab retail sales at the Aaron's business. The figure came above the Zacks Consensus Estimate of $553 million.
Breaking up the components of consolidated revenues, we note that lease revenues and fees dropped 8.7% year over year to $373.8 million and retail sales increased to $150.5 million from $12.6 million. Non-retail sales, which mainly include merchandise sales to franchisees, declined 14% year over year to $23.9 million, while franchise royalties and other revenues in the quarter decreased 3.2% to $6.1 million from the year-ago quarter.
In the Aaron’s business, revenues declined 9.6% year over year to $412.1 million due to lower average lease portfolio size and lease renewal rate coupled with fewer exercises of early purchase options and weak retail sales. E-commerce revenues rose 12.3% year over year and represented 17.9% of the lease revenues.
For BrandsMart, revenues were $144.2 million in the first quarter of 2023. Further, e-commerce product sales were 9.2% of total product sales.
Margins
Aaron’s gross profit rose 3.8% to $295.7 million and the gross margin expanded 80 basis points (bps) to 63.3%. The operating profit came in at $12.7 million, down from the prior-year quarter’s earnings of $30.2 million.
Adjusted EBITDA declined 20.7% year over year to $45.9 million, due to lower lease revenues & fees at the Aaron's business, partly offset by reduced personnel costs. An incremental $2.8 million of the metric was delivered by the inclusion of BrandsMart in the company's consolidated results. The EBITDA margin also contracted 210 bps to 13.2%.
Financial Position
Aaron’s ended the quarter with cash and cash equivalents of $44.3 million, debt of $222.1 million and shareholders’ equity of $703.9 million. The company provided cash of $61 million from operating activities.
At the end of the first quarter, the company generated an adjusted free cash flow of $42.5 million. Capital expenditure was $20.2 million in the reported quarter. Capital expenditures are expected in the band of $90-$105 million for 2023. AAN expects adjusted free cash flow in the range of $75-$85 million for 2023.
Further, Aaron’s declared dividends worth $3.9 million in the quarter under review.
Outlook
For 2023, the company anticipates revenues of $2.15-$2.25 billion versus $2.20-$2.30 billion stated earlier. Adjusted EBITDA (excluding stock-based compensation) is projected in the range of $140-$160 million. It envisions adjusted earnings per share (EPS) of $1-$1.40 compared with the previously mentioned 70 cents to $1.10 for the full year. Earnings per share are expected to be 70-95 cents compared with the earlier stated 55-80 cents.
For the Aaron’s business, revenues are expected to be $1.50-$1.57 billion. Adjusted EBITDA is likely to be $170-$185 million.
For BrandsMart, revenues are anticipated to be $645-$675 million. Adjusted EBITDA is forecast to be $12.5-$17.5 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -23.55% due to these changes.
VGM Scores
At this time, Aaron's has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile 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 #2 (Buy). We expect an above average 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
Aaron's (AAN) Up 1.3% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Aaron's Company, Inc. (AAN - Free Report) . Shares have added about 1.3% in that time frame, underperforming 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 its most recent earnings report in order to get a better handle on the important catalysts.
Aaron's Q1 Earnings Beat Estimates, Revenues Up Y/Y
Aaron's delivered first-quarter 2023 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate. While the top line increased year over year, the bottom line declined.
Aaron's delivered adjusted earnings of 66 cents per share, outpacing the Zacks Consensus Estimate of 28 cents. However, the bottom line declined 24.1% year over year from 87 cents per share reported in the prior-year quarter. On a GAAP basis, AAN reported earnings of 41 cents per share versus earnings of 68 cents in the year-ago quarter.
Quarter in Detail
Consolidated revenues grew 21.5% to $554.4 million, driven by gains from the BrandsMart buyout, somewhat offset by weak lease revenues and fees, and drab retail sales at the Aaron's business. The figure came above the Zacks Consensus Estimate of $553 million.
Breaking up the components of consolidated revenues, we note that lease revenues and fees dropped 8.7% year over year to $373.8 million and retail sales increased to $150.5 million from $12.6 million. Non-retail sales, which mainly include merchandise sales to franchisees, declined 14% year over year to $23.9 million, while franchise royalties and other revenues in the quarter decreased 3.2% to $6.1 million from the year-ago quarter.
In the Aaron’s business, revenues declined 9.6% year over year to $412.1 million due to lower average lease portfolio size and lease renewal rate coupled with fewer exercises of early purchase options and weak retail sales. E-commerce revenues rose 12.3% year over year and represented 17.9% of the lease revenues.
For BrandsMart, revenues were $144.2 million in the first quarter of 2023. Further, e-commerce product sales were 9.2% of total product sales.
Margins
Aaron’s gross profit rose 3.8% to $295.7 million and the gross margin expanded 80 basis points (bps) to 63.3%. The operating profit came in at $12.7 million, down from the prior-year quarter’s earnings of $30.2 million.
Adjusted EBITDA declined 20.7% year over year to $45.9 million, due to lower lease revenues & fees at the Aaron's business, partly offset by reduced personnel costs. An incremental $2.8 million of the metric was delivered by the inclusion of BrandsMart in the company's consolidated results. The EBITDA margin also contracted 210 bps to 13.2%.
Financial Position
Aaron’s ended the quarter with cash and cash equivalents of $44.3 million, debt of $222.1 million and shareholders’ equity of $703.9 million. The company provided cash of $61 million from operating activities.
At the end of the first quarter, the company generated an adjusted free cash flow of $42.5 million. Capital expenditure was $20.2 million in the reported quarter. Capital expenditures are expected in the band of $90-$105 million for 2023. AAN expects adjusted free cash flow in the range of $75-$85 million for 2023.
Further, Aaron’s declared dividends worth $3.9 million in the quarter under review.
Outlook
For 2023, the company anticipates revenues of $2.15-$2.25 billion versus $2.20-$2.30 billion stated earlier. Adjusted EBITDA (excluding stock-based compensation) is projected in the range of $140-$160 million. It envisions adjusted earnings per share (EPS) of $1-$1.40 compared with the previously mentioned 70 cents to $1.10 for the full year. Earnings per share are expected to be 70-95 cents compared with the earlier stated 55-80 cents.
For the Aaron’s business, revenues are expected to be $1.50-$1.57 billion. Adjusted EBITDA is likely to be $170-$185
million.
For BrandsMart, revenues are anticipated to be $645-$675 million. Adjusted EBITDA is forecast to be $12.5-$17.5 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -23.55% due to these changes.
VGM Scores
At this time, Aaron's has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile 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 #2 (Buy). We expect an above average return from the stock in the next few months.