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Upbound (UPBD) Q4 Earnings Top Estimates, Sales Increase Y/Y
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Upbound Group, Inc. (UPBD - Free Report) , earlier known as Rent-A-Center, posted its fourth-quarter 2023 results, wherein both the top and bottom lines surpassed the consensus estimate. The company’s revenues increased, while earnings declined year over year.
Markedly, shares of the company jumped 5.7% on Feb 22. The stock has rallied 26.7% in tandem with the industry’s growth in the past year.
Upbound Group, Inc. Price, Consensus and EPS Surprise
Upbound posted adjusted earnings of 81 cents per share, surpassing the Zacks Consensus Estimate of 77 cents. However, the bottom line dipped from 86 cents in the year-ago quarter.
Total revenues of $1,018.1 million came above the consensus estimate of $996 million. The metric increased 2.8% year over year, mainly due to higher rentals and fees, which compensated for the decline in revenues from merchandise sales.
Adjusted EBITDA was $107.6 million, down 2.2% year over year. An increase in adjusted EBITDA from the Acima segment was negated by a decrease in the same metric from the Rent-A-Center segment and an increase in corporate expenses.
The Zacks Rank #4 (Sell) company’s adjusted EBITDA margin dropped by 50 basis points year over year to 10.6%, mainly as a result of increased corporate expenses.
Image Source: Zacks Investment Research
Segmental Performance
Revenues from the Rent-A-Center segment dipped 1.7% year over year to $459.3 million due to lower lease portfolio value in prior quarters. Same-store sales were down 1.6% year over year.
The segment’s lease portfolio value increased 1.5% year over year. Segmental adjusted EBITDA margin was 14.5%, decreasing 10 basis points from the prior year. As of Dec 31, 2023, the unit had 1,839 locations.
The Zacks Consensus Estimate for the Rent-A-Center segment’s revenues was pegged at $462 million for the quarter.
Revenues at the Acima segment (formerly known as the Preferred Lease segment) increased 6.6% year over year to $507.9 million, mainly due to higher rental and fee revenues, counterbalanced by a decrease in merchandise sales. Also, gross merchandise volume increased 19% due to an expansion of merchant numbers, heightened demand leading to a greater number of leases per merchant and enhanced conversion rates. The segment’s adjusted EBITDA margin decreased to 14.8% from 15% in the year-ago period.
The Zacks Consensus Estimate for the Acima segment’s revenues was pegged at $493 million for the quarter.
Franchising revenues rose 5% to $31.8 million, primarily due to increased inventory purchases per store. As of Dec 31, 2023, Rent-A-Center had 440 franchise-operated locations.
Mexico segment’s revenues totaled $19.1 million, up 3.7% on a constant-currency basis. As of Dec 31, 2023, the unit had 131 company-operated locations.
Other Financial Aspects
Upbound ended the reported quarter with cash and cash equivalents of $93.7 million, net senior debt of $866.7 million and stockholders' equity of $560.4 million.
In 2023, the company distributed $133.1 million to shareholders, including $1.36 million in annual dividends and $50 million in share repurchases.
UPBD provided cash from operating activities of $200.3 million in 2023.
Outlook
The company's strong financial performance in 2023 is a positive sign for its future prospects. It is well-positioned to continue growing in 2024 despite the challenging market conditions.
UPBD expects to generate consolidated revenues in the $4-$4.20 billion band in 2024. It reported revenues of $4 billion in 2023. Adjusted EBITDA, excluding SBC, is expected to be between $455 million and $485 million. In 2023, it reported adjusted EBITDA of $455.7 million.
Adjusted earnings are expected in the band of $3.55-$4.00 per share in 2024 compared with $3.55 in 2023.
The company expects free cash flow in the band of $100-$130 million for 2024.
Key Consumer Discretionary Picks
Here, we have highlighted three better-ranked stocks, namely Reynolds Consumer Products Inc. (REYN - Free Report) , Ralph Lauren Corp. (RL - Free Report) and lululemon athletica inc. (LULU - Free Report) .
The Zacks Consensus Estimate for Reynolds’ current financial-year earnings suggests growth of 13.4% from 2023 actuals. REYN has a trailing four-quarter earnings surprise of 5.5%, on average.
Ralph Lauren is a major designer, marketer and distributor of premium lifestyle products. The company currently flaunts a Zacks Rank #1.
The Zacks Consensus Estimate for Ralph Lauren’s current fiscal-year sales and earnings suggests growth of 2.5% and 21.2%, respectively, from fiscal 2023 reported figures. RL has a trailing four-quarter earnings surprise of 18.7%, on average.
lululemon is a yoga-inspired athletic apparel company that creates lifestyle components. The company carries a Zacks Rank #2 (Buy) at present.
The Zacks Consensus Estimate for lululemon’s current fiscal-year sales and earnings suggests growth of 18.4% and 23.8%, respectively, from fiscal 2022 reported figures. LULU has a trailing four-quarter earnings surprise of 9.2%, on average.
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Upbound (UPBD) Q4 Earnings Top Estimates, Sales Increase Y/Y
Upbound Group, Inc. (UPBD - Free Report) , earlier known as Rent-A-Center, posted its fourth-quarter 2023 results, wherein both the top and bottom lines surpassed the consensus estimate. The company’s revenues increased, while earnings declined year over year.
Markedly, shares of the company jumped 5.7% on Feb 22. The stock has rallied 26.7% in tandem with the industry’s growth in the past year.
Upbound Group, Inc. Price, Consensus and EPS Surprise
Upbound Group, Inc. price-consensus-eps-surprise-chart | Upbound Group, Inc. Quote
Q4 in Detail
Upbound posted adjusted earnings of 81 cents per share, surpassing the Zacks Consensus Estimate of 77 cents. However, the bottom line dipped from 86 cents in the year-ago quarter.
Total revenues of $1,018.1 million came above the consensus estimate of $996 million. The metric increased 2.8% year over year, mainly due to higher rentals and fees, which compensated for the decline in revenues from merchandise sales.
Adjusted EBITDA was $107.6 million, down 2.2% year over year. An increase in adjusted EBITDA from the Acima segment was negated by a decrease in the same metric from the Rent-A-Center segment and an increase in corporate expenses.
The Zacks Rank #4 (Sell) company’s adjusted EBITDA margin dropped by 50 basis points year over year to 10.6%, mainly as a result of increased corporate expenses.
Image Source: Zacks Investment Research
Segmental Performance
Revenues from the Rent-A-Center segment dipped 1.7% year over year to $459.3 million due to lower lease portfolio value in prior quarters. Same-store sales were down 1.6% year over year.
The segment’s lease portfolio value increased 1.5% year over year. Segmental adjusted EBITDA margin was 14.5%, decreasing 10 basis points from the prior year. As of Dec 31, 2023, the unit had 1,839 locations.
The Zacks Consensus Estimate for the Rent-A-Center segment’s revenues was pegged at $462 million for the quarter.
Revenues at the Acima segment (formerly known as the Preferred Lease segment) increased 6.6% year over year to $507.9 million, mainly due to higher rental and fee revenues, counterbalanced by a decrease in merchandise sales. Also, gross merchandise volume increased 19% due to an expansion of merchant numbers, heightened demand leading to a greater number of leases per merchant and enhanced conversion rates. The segment’s adjusted EBITDA margin decreased to 14.8% from 15% in the year-ago period.
The Zacks Consensus Estimate for the Acima segment’s revenues was pegged at $493 million for the quarter.
Franchising revenues rose 5% to $31.8 million, primarily due to increased inventory purchases per store. As of Dec 31, 2023, Rent-A-Center had 440 franchise-operated locations.
Mexico segment’s revenues totaled $19.1 million, up 3.7% on a constant-currency basis. As of Dec 31, 2023, the unit had 131 company-operated locations.
Other Financial Aspects
Upbound ended the reported quarter with cash and cash equivalents of $93.7 million, net senior debt of $866.7 million and stockholders' equity of $560.4 million.
In 2023, the company distributed $133.1 million to shareholders, including $1.36 million in annual dividends and $50 million in share repurchases.
UPBD provided cash from operating activities of $200.3 million in 2023.
Outlook
The company's strong financial performance in 2023 is a positive sign for its future prospects. It is well-positioned to continue growing in 2024 despite the challenging market conditions.
UPBD expects to generate consolidated revenues in the $4-$4.20 billion band in 2024. It reported revenues of $4 billion in 2023. Adjusted EBITDA, excluding SBC, is expected to be between $455 million and $485 million. In 2023, it reported adjusted EBITDA of $455.7 million.
Adjusted earnings are expected in the band of $3.55-$4.00 per share in 2024 compared with $3.55 in 2023.
The company expects free cash flow in the band of $100-$130 million for 2024.
Key Consumer Discretionary Picks
Here, we have highlighted three better-ranked stocks, namely Reynolds Consumer Products Inc. (REYN - Free Report) , Ralph Lauren Corp. (RL - Free Report) and lululemon athletica inc. (LULU - Free Report) .
Reynolds is a consumer-branded and private-label product company that sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Reynolds’ current financial-year earnings suggests growth of 13.4% from 2023 actuals. REYN has a trailing four-quarter earnings surprise of 5.5%, on average.
Ralph Lauren is a major designer, marketer and distributor of premium lifestyle products. The company currently flaunts a Zacks Rank #1.
The Zacks Consensus Estimate for Ralph Lauren’s current fiscal-year sales and earnings suggests growth of 2.5% and 21.2%, respectively, from fiscal 2023 reported figures. RL has a trailing four-quarter earnings surprise of 18.7%, on average.
lululemon is a yoga-inspired athletic apparel company that creates lifestyle components. The company carries a Zacks Rank #2 (Buy) at present.
The Zacks Consensus Estimate for lululemon’s current fiscal-year sales and earnings suggests growth of 18.4% and 23.8%, respectively, from fiscal 2022 reported figures. LULU has a trailing four-quarter earnings surprise of 9.2%, on average.