It has been about a month since the last earnings report for Rent-A-Center Inc. . Shares have lost about 5.6% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted 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.
Rent-A-Center Beats on Q1 Earnings, Revenues Miss
Rent-A-Center posted first-quarter 2017 adjusted earnings of $0.04 per share that beat the Zacks Consensus Estimate of $0.01 but fell substantially from $0.48 delivered in the year-ago period. Total revenue of $742 million declined 11.2% year over year and also came below the respective estimate of $744 million, marking the seventh straight quarter of sales miss.
Total revenue tumbled due to decline witnessed across the Core U.S., Mexico and Franchising segments, partially mitigated by growth registered at Acceptance Now segment.
Comparable-store sales (comps) for the quarter dropped 7.8%, reflecting declines of 12.5% and 6% in the Core U.S. and Mexico segments, respectively, partly neutralized by a 2.9% increase noted at the Acceptance Now segment.
We note adjusted earnings per share improved $0.27, while comps improved 150 basis points on a sequential basis.
Delving Deeper
Revenues from the Acceptance Now segment gained 1.8% from the prior-year quarter figure to $234.5 million attributable to higher comps.
Revenues from the Core U.S. segment slumped 16% to $490.9 million, owing to continued store base rationalization (8% reduction in store count) and dismal comps.
The Mexico segment’s revenues came in at $11.1 million, down 19.3% year over year – attributable to foreign currency fluctuations, store closures and lower comps. Finally, total Franchising revenues plunged 23.8% to $5.4 million during the quarter on account of fall in the amount of merchandise sold to the franchise partners.
Rent-A-Center’s adjusted EBITDA declined 52.8% to $33.3 million, while EBITDA margin shriveled 400 basis points to 4.5%.
Store Update
At the end of the quarter, there were 2,453 Core U.S. locations, 1,389 Acceptance Now Staffed stores, 96 Acceptance Now Direct stores, 131 stores in Mexico and 229 Franchise stores.
Other Financial Aspects
Rent-A-Center ended the quarter with cash and cash equivalents of $58.1 million and net Senior debt of $115.6 million. The company lowered outstanding debt balance by $71.6 million in the quarter under review. During the quarter, the company generated $59.1 million of cash from operations and incurred capital expenditures of $22 million.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been three revisions higher for the current quarter compared to two lower. In the past month, the consensus estimate has shifted 8.5% due to these changes.
Rent-A-Center Inc. Price and Consensus
VGM Scores
At this time, Rent-A-Center's stock has a strong Growth Score of 'A', though it is lagging a lot on the momentum front with a 'C'. However, 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.
Based on our scores, the stock is more suitable for value and growth investors than momentum investors.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.
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Rent-A-Center (RCII) Down 5.6% Since Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Rent-A-Center Inc. . Shares have lost about 5.6% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted 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.
Rent-A-Center Beats on Q1 Earnings, Revenues Miss
Rent-A-Center posted first-quarter 2017 adjusted earnings of $0.04 per share that beat the Zacks Consensus Estimate of $0.01 but fell substantially from $0.48 delivered in the year-ago period. Total revenue of $742 million declined 11.2% year over year and also came below the respective estimate of $744 million, marking the seventh straight quarter of sales miss.
Total revenue tumbled due to decline witnessed across the Core U.S., Mexico and Franchising segments, partially mitigated by growth registered at Acceptance Now segment.
Comparable-store sales (comps) for the quarter dropped 7.8%, reflecting declines of 12.5% and 6% in the Core U.S. and Mexico segments, respectively, partly neutralized by a 2.9% increase noted at the Acceptance Now segment.
We note adjusted earnings per share improved $0.27, while comps improved 150 basis points on a sequential basis.
Delving Deeper
Revenues from the Acceptance Now segment gained 1.8% from the prior-year quarter figure to $234.5 million attributable to higher comps.
Revenues from the Core U.S. segment slumped 16% to $490.9 million, owing to continued store base rationalization (8% reduction in store count) and dismal comps.
The Mexico segment’s revenues came in at $11.1 million, down 19.3% year over year – attributable to foreign currency fluctuations, store closures and lower comps. Finally, total Franchising revenues plunged 23.8% to $5.4 million during the quarter on account of fall in the amount of merchandise sold to the franchise partners.
Rent-A-Center’s adjusted EBITDA declined 52.8% to $33.3 million, while EBITDA margin shriveled 400 basis points to 4.5%.
Store Update
At the end of the quarter, there were 2,453 Core U.S. locations, 1,389 Acceptance Now Staffed stores, 96 Acceptance Now Direct stores, 131 stores in Mexico and 229 Franchise stores.
Other Financial Aspects
Rent-A-Center ended the quarter with cash and cash equivalents of $58.1 million and net Senior debt of $115.6 million. The company lowered outstanding debt balance by $71.6 million in the quarter under review. During the quarter, the company generated $59.1 million of cash from operations and incurred capital expenditures of $22 million.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been three revisions higher for the current quarter compared to two lower. In the past month, the consensus estimate has shifted 8.5% due to these changes.
Rent-A-Center Inc. Price and Consensus
Rent-A-Center Inc. Price and Consensus | Rent-A-Center Inc. Quote
VGM Scores
At this time, Rent-A-Center's stock has a strong Growth Score of 'A', though it is lagging a lot on the momentum front with a 'C'. However, 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.
Based on our scores, the stock is more suitable for value and growth investors than momentum investors.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.