) announced that it has enhanced its current share repurchase
authorization to $1.25 billion from $1 billion.
Since the inception of the share buyback program, the company
has repurchased 31,585,314 shares for approximately $794.8
million. Moreover, it bought back 465,035 shares for
approximately $17.4 million during the last reported quarter.
The announcement comes at a perfect time when the company
badly needs to restore the confidence of its investors in the
stock, following its disappointing first-quarter performance.
Earlier last week, Rent-A-Center delivered first-quarter 2013
earnings of 80 cents a share that missed the Zacks Consensus
Estimate of 85 cents, and dropped 8% from 87 cents earned in the
prior-year quarter. Total revenue fell 1.9% to $819.3
million from the year-ago quarter and fell short of the Zacks
Consensus Estimate of $850 million.
Rent-A-Center's gross profit tumbled 1.7% to $550.7 million,
while gross margin expanded 10 basis points to 67.2%. Operating
profit fell 13.9% to $79.3 million, whereas operating profit
margin contracted 130 basis points to 9.7%. Adjusted EBITDA
decreased 11.4% to $98.6 million, while adjusted EBITDA margin
shriveled 130 basis points to 12%.
Following its sluggish performance, Rent-A-Center now projects
2013 top-line growth of 3.5% to 5.5%, attributable to a
contribution of $540 million from the RAC Acceptance business.
Management forecasts comparable-store sales growth ranging from
1% - 2% for 2013.
Earlier, Rent-A-Center had expected total revenue growth of 5%
to 8%, and comps increase of 2% to 4% in 2013.
Management now envisions 2013 earnings in the band of $2.95 to
$3.10 per share, including a cost of 25 cents related to its
international expansion initiatives. Earlier, management had
projected 2013 earnings between $3.25 and $3.40 per share.
Management also forecasted a 50 basis points contraction in gross
profit and operating margins for 2013.
Following the company's trimmed outlook, shares of
Rent-A-Center maintain a Zacks Rank #4 (Sell).
Other Stocks to Consider
Until any further upgrade on the Zacks Rank of Rent-A-Center,
other stocks worth considering in the finance-leasing industry
KCAP Financial, Inc
American Capital, Ltd
), all holding a Zacks Rank #1 (Strong Buy).
AMER CAP LTD (ACAS): Free Stock Analysis
AEROCENTURY CP (ACY): Get Free Report
KCAP FINL INC (KCAP): Free Stock Analysis
RENT-A-CENTER (RCII): Free Stock Analysis
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