), the largest rent-to-own operator in the U.S, leverages an
extensive network of stores to effectively penetrate into its
target markets, which in turn, facilitates the company to generate
healthy sales and gain a competitive advantage over its
Following its rationale, Rent-A-Center, which competes with
) and Advance America, announced the opening of its new store in
The company, through its latest store, will offer furnishings,
electrical devices, electronics and computers to the residents of
this region. With the inclusion of this new store, Rent-A-Center
now operates through 79 locations in Georgia.
The residents of the region will have the benefit of purchasing
goods with flexible payment options, facilitating them to pay
weekly, biweekly or monthly. Moreover, the company offers a
lifetime recall service, which facilitates its customers to re-rent
the same or a comparable item and receive payments.
Late last month, Rent-A-Center delivered better-than-expected
second-quarter 2012 results. The quarterly 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 on the top line.
The company's business model, called RAC Acceptance, is gaining
traction. When a consumer is denied credit financing for a
particular product from the retailer, Rent-A-Center acquires that
product from the retailer by virtue of the RAC Acceptance program,
and thereby offers it to the consumer under a rental-purchase
For fiscal 2012, the company continues to expect top-line growth
between 7% and 10%, attributable to a low single-digit jump in Core
U.S. and more than $300 million contribution from the RAC
Acceptance business. Management expects comparable-store sales
between 2.5% and 4.5%.
Management maintained its fiscal 2012 earnings projection of
$3.00 to $3.20 per share, including a 25-30 cents cost related to
its international expansion initiatives.
Currently, we have a long-term Outperform recommendation on the
stock. However, the company has a Zacks #2 Rank, which translates
into a short-term Buy rating.
(AAN): ETF Research Reports
RENT-A-CENTER (RCII): Free Stock Analysis
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