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 Rent-A-Center May Not be Worth Adding to Your Portfolio
Read MoreHide Full Article
Rent-A-Center, Inc. , which has been witnessing a downtrend in the Zacks Consensus Estimate, has underperformed the Zacks categorized Consumer Services–Miscellaneous industry in the past six months. Share price of this rent-to-own operator has plunged roughly 19.2% in the said period, while the industry registered a decline of 4.8%. While the broader Consumer Discretionary sector of which they are part of gained 4.7% in the same time frame.
We noted that the industry occupies a space in the bottom 30% of the Zacks Classified industries (185 out of the 265). Further, the broader sector is also placed at bottom 31% of the Zacks Classified sectors (11 out of 16).
What Has Hurt the Stock?
Rent-A-Center has been witnessing a downtrend in estimates, in spite of an earnings beat in third-quarter 2016. We noted that total revenue fell short of the estimate for the fifth consecutive quarter. Further, both the top line and bottom line declined year over year.
The company posted adjusted quarterly earnings of 11 cents a share that beat the Zacks Consensus Estimate by a couple of cents but decreased from 47 cents reported in the year-ago period. Total revenue tumbled 12.3% to $693.9 million, due to a decline witnessed across the Core U.S., Acceptance Now and Mexico segments, somewhat compensated by enhanced revenue from the Franchising segment. Further, revenues fell short of the Zacks Consensus Estimate of $698.4 million.
The technical snags and outages after the execution of new store information management system within Core U.S. stores adversely impacted the operating results. The decrease in the top line is attributable to a decline witnessed across the Core U.S., Acceptance Now and Mexico segments.
Following the murky performance of this Zacks Rank #4 (Sell) stock, management lowered its previously issued outlook for 2016. Rent-A-Center now projects Core revenue in the band of $2,065–$2,100 million and Acceptance Now revenue in the range of $805−$835 million. The company anticipates adjusted earnings between $1.05 and $1.15 per share for the full year. Management had earlier projected 2016 earnings per share to be in the range of $1.65–$1.85.
Analysts polled by Zacks are skeptical about the stock. Over the past 90 days, the Zacks Consensus Estimate of $1.11 for 2016 and $1.20 for 2017 has declined 18 cents and 27 cents, respectively. Moreover, the Zacks Consensus Estimate for the fourth quarter has dropped 21 cents to 11 cents over the same time frame.
Stocks that Warrant a Look
It would be prudent for investors to look beyond Rent-A-Center, at least for the time being. Investors may consider better-ranked stocks such as Best Buy Co., Inc. (BBY - Free Report) , The Children's Place, Inc. (PLCE - Free Report) and Burlington Stores, Inc. (BURL - Free Report) , all flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Best Buy delivered an average positive earnings surprise of 25.7% in the trailing four quarters and has a long-term earnings growth rate of 11.9%.
The Children's Place delivered an average positive earnings surprise of 36.3% in the trailing four quarters and has a long-term earnings growth rate of 10.3%.
Burlington Stores delivered an average positive earnings surprise of 25.6% in the trailing four quarters and has a long-term earnings growth rate of 19.9%.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Why Rent-A-Center May Not be Worth Adding to Your Portfolio
Rent-A-Center, Inc. , which has been witnessing a downtrend in the Zacks Consensus Estimate, has underperformed the Zacks categorized Consumer Services–Miscellaneous industry in the past six months. Share price of this rent-to-own operator has plunged roughly 19.2% in the said period, while the industry registered a decline of 4.8%. While the broader Consumer Discretionary sector of which they are part of gained 4.7% in the same time frame.
We noted that the industry occupies a space in the bottom 30% of the Zacks Classified industries (185 out of the 265). Further, the broader sector is also placed at bottom 31% of the Zacks Classified sectors (11 out of 16).
What Has Hurt the Stock?
Rent-A-Center has been witnessing a downtrend in estimates, in spite of an earnings beat in third-quarter 2016. We noted that total revenue fell short of the estimate for the fifth consecutive quarter. Further, both the top line and bottom line declined year over year.
The company posted adjusted quarterly earnings of 11 cents a share that beat the Zacks Consensus Estimate by a couple of cents but decreased from 47 cents reported in the year-ago period. Total revenue tumbled 12.3% to $693.9 million, due to a decline witnessed across the Core U.S., Acceptance Now and Mexico segments, somewhat compensated by enhanced revenue from the Franchising segment. Further, revenues fell short of the Zacks Consensus Estimate of $698.4 million.
The technical snags and outages after the execution of new store information management system within Core U.S. stores adversely impacted the operating results. The decrease in the top line is attributable to a decline witnessed across the Core U.S., Acceptance Now and Mexico segments.
Following the murky performance of this Zacks Rank #4 (Sell) stock, management lowered its previously issued outlook for 2016. Rent-A-Center now projects Core revenue in the band of $2,065–$2,100 million and Acceptance Now revenue in the range of $805−$835 million. The company anticipates adjusted earnings between $1.05 and $1.15 per share for the full year. Management had earlier projected 2016 earnings per share to be in the range of $1.65–$1.85.
Analysts polled by Zacks are skeptical about the stock. Over the past 90 days, the Zacks Consensus Estimate of $1.11 for 2016 and $1.20 for 2017 has declined 18 cents and 27 cents, respectively. Moreover, the Zacks Consensus Estimate for the fourth quarter has dropped 21 cents to 11 cents over the same time frame.
Stocks that Warrant a Look
It would be prudent for investors to look beyond Rent-A-Center, at least for the time being. Investors may consider better-ranked stocks such as Best Buy Co., Inc. (BBY - Free Report) , The Children's Place, Inc. (PLCE - Free Report) and Burlington Stores, Inc. (BURL - Free Report) , all flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Best Buy delivered an average positive earnings surprise of 25.7% in the trailing four quarters and has a long-term earnings growth rate of 11.9%.
The Children's Place delivered an average positive earnings surprise of 36.3% in the trailing four quarters and has a long-term earnings growth rate of 10.3%.
Burlington Stores delivered an average positive earnings surprise of 25.6% in the trailing four quarters and has a long-term earnings growth rate of 19.9%.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>