To further strengthen its operational roots in the state of
Texas, Rent-A-Center Inc . ( RCII ),
the largest rent-to-own operator in the U.S, opened an additional
store in Austin. The company, through its latest store, will offer
furnishings, electrical devices, electronics and computers. With
the inclusion of this new store, Rent-A-Center will conduct
operations through 277 locations in Texas.
The residents of the region will now have an additional option
of purchasing goods with flexible payment options (freedom 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.
The move was in line with the company's strategic approach of
leveraging an extensive network of stores to effectively penetrate
into its target markets, which in turn facilitates it to generate
healthy sales and gain competitive advantage over its rivals,
Aaron's Inc . ( AAN )
and Advance America.
Moreover, the company is taking prudent steps to optimize rental
merchandise levels in accordance with sales trends. Rent-A-Center
implemented a centralized inventory management system, including
automated merchandise replenishment. Moreover, a new centralized
purchasing system allows better management of rental
Going forward, the company remains optimistic about its future
growth as it opens stores in international markets and accelerates
the rollout of RAC Acceptance kiosks.
Management anticipates earnings to be within $3.00 to $3.20 per
share range in 2012. Revenue growth is expected to be roughly 7% to
10% for the year, attributable to a low single-digit jump in the
Core U.S. and more than $300 million contribution from the RAC
Acceptance business. Comparable-store sales are expected to be
within 2.5% and 4.5%.
The current Zacks Consensus Estimate for the third quarter of
2012 is 68 cents, representing a year-over-year growth of 12.5%.
Estimates for 2012 and 2013 are $3.15 and $3.55, reflecting annual
growth of 8.14% and 12.95%, respectively.
Currently, we have a long-term 'Outperform' recommendation on
the stock. However, the company has a Zacks #3 Rank, which
translates into a short-term 'Hold' rating.
(AAN): ETF Research Reports
RENT-A-CENTER (RCII): Free Stock Analysis
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