Earnings Preview: Rent-A-Center - Analyst Blog

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Rent-A-Center Inc. ( RCII ), one of the largest rent-to-own operators in the U.S., is slated to report its third-quarter 2012 financial results on October 22. The current Zacks Consensus Estimate for the quarter stands at 68 cents per share, indicating an increase of 12.5% from the prior-year quarter's earnings. Revenue, as per the Zacks Consensus Estimate, is $759 million.

Second-Quarter Synopsis

Rent-A-Center's second quarter earnings of 74 cents a share surpassed the Zacks Consensus Estimate of 71 cents, and increased 8.8% from 68 cents earned in the prior-year quarter, aided by growth in the top line.

Rent-A-Center's total revenue, which comprises store and franchise revenues, elevated 7.4% to $749.7 million from the year-ago quarter but fell short of the Zacks Consensus Estimate of $757 million. Comparable-store sales for the quarter rose 2.8%. The boost in the top line was attributable to higher revenue from the RAC Acceptance segment.

Estimate Revisions Trend

Agreement

We do not see any major estimate revisions at this point. Among the 10 analysts covering the stock, none revised the estimate in the upward or downward direction for the upcoming quarter. Moreover, the story remains the same for fiscal 2012.

Analysts kept their estimates intact, in the absence of any major news having a direct or indirect impact on the estimates.

Magnitude

In the absence of estimate revisions, the Zacks Consensus Estimate remained stable at 68 cents and $3.15 for the third quarter and full-year 2012, respectively over the last 30 days.

Positive Surprise History

With respect to earnings surprises, Rent-A-Center has surpassed the Zacks Consensus Estimate over the last four quarters in the range of 3.5% to 4.2%. The average remained at 3.7%, indicating that the company has surpassed the Zacks Consensus Estimate by the same magnitude in the trailing four quarters.

Our Take

Currently, Rent-A-Center, which competes with Aaron's Inc. ( AAN ), holds a Zacks #3 Rank that translates into a short-term Hold rating. However, considering the fundamentals, we have a long-term Outperform recommendation on the stock.



(AAN): ETF Research Reports

RENT-A-CENTER (RCII): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: AAN , RCII

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