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Things to Know Ahead of Rent-A-Center's (RCII) Q4 Earnings

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Rent-A-Center, Inc. RCII is scheduled to report fourth-quarter 2019 numbers on Feb 24, after market close. The company has trailing four-quarter positive earnings surprise of 45.5%, on average.

The Zacks Consensus Estimate for fourth-quarter earnings is pegged at 57 cents, which suggests growth of about 63% from earnings of 35 cents reported in the year-ago quarter. We note that the Zacks Consensus Estimate has been stable in the past 30 days. Moreover, the consensus estimate for quarterly revenues is at $660.2 million, which indicates a 0.2% drop from the year-ago quarter’s tally.

Rent-A-Center, Inc. Price and EPS Surprise


Rent-A-Center, Inc. Price and EPS Surprise

Rent-A-Center, Inc. price-eps-surprise | Rent-A-Center, Inc. Quote


Key Factors

Well-chalked endeavors such as cost containment, rationalization of store base and savings on interest expense on account of lower debt load are likely to have driven the company’s bottom line in the final quarter. Moreover, the company is optimizing product mix, increasing the average ticket price, upgrading workforce and concentrating on lowering delinquency rates.

In addition, the company has been benefiting from its e-commerce platform and Acceptance Now business model. The Acceptance Now business model is gaining traction and includes the results of Merchants Preferred buyout that has been driving invoice volume. This buyout enhances the company’s rent-to-own capabilities as well as enables it to provide virtual and staffed solutions to retail partners. These factors are likely to have contributed to the company’s top line in the to-be-reported quarter. Per the Zacks Consensus Estimate, Rent-A-Center's same-store sales growth is pegged at 2.9% rise.

However, softness across the company’s Core U.S. segment persists. The Zacks Consensus Estimate for Core U.S. segment’s revenues is currently pegged at $451 million, which suggests a decline of 3.3% year over year. This is likely to exert pressure on the company’s top-line performance. Moreover, intense competition in the industry remains a woe.

What Our Zacks Model Says

Our proven model does not conclusively predict an earnings beat for Rent-A-Center 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 Rent-A-Center carries a Zacks Rank #3, its Earnings ESP of 0.00% makes surprise prediction difficult.

Stocks Poised to Beat Earnings Estimates

Here are a few companies you may want to consider, as our model shows that these have the right combination to post an earnings beat:

G-III Apparel Group GIII has an Earnings ESP of +5.62% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Costco (COST - Free Report) has an Earnings ESP of +0.56% and a Zacks Rank #2.

Burlington Stores BURL has an Earnings ESP of +0.36% and a Zacks Rank #2.

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