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Aaron's (AAN) to Report Q4 Earnings: What's in the Offing?

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Aaron’s, Inc. AAN is scheduled to report fourth-quarter 2019 results on Feb 20. In the trailing four quarters, the company’s bottom line outperformed the Zacks Consensus Estimate by 2.5%, on average.

The consensus estimate for Aaron’s fourth-quarter earnings is pegged at $1.06, indicating growth of 3.9% from the prior-year quarter’s reported figure. Notably, the consensus mark moved down by a penny in the last seven days. For quarterly revenues, the consensus estimate stands at $1,008 million, suggesting an increase of 1.5% from the prior-year quarter’s reported figure.

The Zacks Consensus Estimate for 2019 earnings per share stands at $3.80, suggesting a rise of 13.1% from the year-ago period’s reported figure. The consensus mark for revenues stands at $3.95 billion.

Key Factors to Note

Aaron’s Progressive segment has been performing well for a while now, driven by robust growth in invoice volume and a solid customer base. Enhanced productivity from new and existing retailers coupled with the recent rollout of additional locations is likely to have driven invoice growth in the fourth quarter. Notably, the Zacks Consensus Estimate for fourth-quarter revenues for the Progressive segment is pegged at $557 million, suggesting growth of 6.3% from the prior-year quarter.

On its last earnings call, the company had anticipated active door count to recover in the fourth quarter on the favorable comparison of mattress and mobile reductions from the prior year. Also, it expects to have gained from the addition of retail partner locations.

Moreover, the Aaron’s business has been progressing well with its transformational initiatives. The segment has been benefiting from the expansion of next-generation concept store, which might have lifted in-store traffic and revenues in the quarter. Additionally, the company’s e-commerce site (Aarons.com) has been witnessing significant growth in the past few years, and has been attracting new and younger customers.

However, soft same-store sales and adjusted EBITDA due to dismal collection performance are likely to have remained dragging for the Aaron’s segment. The consensus mark for the segment is pegged at $452 million, indicating a decline of 1.7% from the year-ago period’s reported figure.

Moreover, in the last reported quarter, management narrowed its overall view for 2019. The company expects total revenues of $3,905-$4,010 million, down from $3,905-$4,065 million mentioned earlier. It predicts adjusted earnings of $3.75-$3.85 per share, down from $3.85-$4.00 stated earlier.

What the Zacks Model Predicts

Our proven model does not conclusively predict an earnings beat for Aaron’s this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Although Aaron’s carries a Zacks Rank #3, its Earnings ESP of -1.81% makes surprise prediction difficult.

Aaron's, Inc. Price and EPS 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 post an earnings beat:

Burlington Stores BURL currently has an Earnings ESP of +0.36% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Costco Wholesale Corporation COST has an Earnings ESP of +0.56% and a Zacks Rank #2 at present.

Ross Stores (ROST - Free Report) currently has an Earnings ESP of +0.09% and a Zacks Rank #2.

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