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What You Should Know About Aaron's (AAN) Before Q1 Earnings

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Aaron's, Inc. (AAN - Free Report) is slated to report first-quarter 2018 results on Apr 26. The company has delivered a positive earnings surprise in three of the trailing four quarters with an average beat of 9.6%.

The Zacks Consensus Estimate of 95 cents for the quarter to be reported remained stable in the last 30 days, reflecting year-over-year growth of 18.8% from 80 cents earned in the year-ago quarter.

Aaron's, Inc. Price, Consensus and EPS Surprise

Aaron's, Inc. Price, Consensus and EPS Surprise | Aaron's, Inc. Quote

 

Let’s see, how things are shaping up prior to this announcement.

Factors at Play

Aaron's has been performing quite well at its Progressive Leasing business, witnessing sturdy revenue growth and aiding the company’s top line. It has also been making investments in its Aaron's Business to enhance direct-to-consumer platform as well as boost overall growth.

Further, management remains encouraged about the SEI acquisition, Aaron's largest franchisee, which is likely to benefit the company in the first quarter. The transaction is expected to widen Aaron's footprint in the markets with high-growth opportunities besides boosting its revenues and supply-chain synergies between the Aaron's Business and Progressive Leasing.

Notably, analysts polled by Zacks expect revenues of $941.3 million, up 11.5% from the year-ago quarter.

However, Aaron's has been witnessing declining comparable store sales (comps) at the company-operated stores for quite some time, which is a key concern. Evidently, comps dropped 5.4%, 5.6%, 8.1% and 9.3% in the fourth, third, second and first quarters of 2017, respectively. Also, the company’s Aaron’s Business segment is persistently sluggish and is reporting soft revenues for a while now.

Given the mixed factors, let’s wait and see what lies ahead of Aaron's when it reports first-quarter 2018 results.

Zacks Model

Our proven model does not conclusively show that Aaron’s is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a solid Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as highlighted below. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The company carries a Zacks Rank #3, which increases the predictive power of ESP. However, Aaron’s Earnings ESP of -0.30% leaves surprise prediction inconclusive as the company needs to have a positive ESP to be confident about an earnings surprise.

Stocks With Favorable Combination

Here are some companies you may want to consider as our model shows that these have the right combination of elements to beat estimates this time around:

Ruth's Hospitality Group, Inc. (RUTH - Free Report) has an Earnings ESP of +1.70% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Abercrombie & Fitch Co. (ANF - Free Report) has an Earnings ESP of +6.01% and a Zacks Rank of 3.

Dollar Tree, Inc. (DLTR - Free Report) has an Earnings ESP of +1.66% and is a Zacks #3 Ranked player.

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