Is Rent-A-Center (RCII) Q3 Earnings Likely to Improve Y/Y?

Rent-A-CenterRCII is expected to report third-quarter 2018 results on Oct 29. In the last reported quarter, the company delivered a positive earnings surprise following three straight quarters of a miss.

Let's see how things are shaping up prior to this announcement.

Which Way Are Top & Bottom-Line Estimates Headed?

The Zacks Consensus Estimate for third-quarter earnings is pegged at 29 cents, which shows considerable improvement from a loss of 15 cents in the year-ago quarter. We note that the Zacks Consensus Estimate has been stable in the last 30 days. The consensus estimate for revenues is at $635 million, reflecting a year-over-year decline of 1.4%. We note that total revenues of this Texas-based company fell almost 3.2% in the last reported quarter.

Let's delve deeper and find out the factors impacting the results.

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

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

Factors at Play

Rent-A-Center, which has accepted the buyout offer of Vintage Capital, is focused on enhancing its omni-channel platform so that customers can experience a seamless approach across channels, markets, retailers, products and brands. In doing so, it is increasing e-commerce offerings and mobile applications, and leveraging cloud-based point-of-sale platform to manage orders more efficiently, lower losses and cut operating costs.

Markedly, the company's cost-saving initiatives are much ahead of track, making it hopeful of generating annual run-rate savings of more than $100 million and savings of roughly $70 million in 2018.

The company's Acceptance Now business model is also gaining traction. Notably, comparable-store sale at the Acceptance Now segment improved 3.7% during the second quarter of 2018. Overall comparable-store sale for the second quarter grew 3.7%. The Zacks Consensus Estimate for the metric is currently pegged at 4.1% for the third quarter.

Management intends to focus more on cost containment endeavors, improving traffic trends, targeted value proposition, refranchising program and augmenting cash flow. Further, the company is rationalizing store base and lowering debt load.

What Does the Zacks Model Say?

Our proven model does not conclusively show that Rent-A-Center is likely to beat estimates this quarter. A stock needs to have both - a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP - for this to happen. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Rent-A-Center has a Zacks Rank #1 (Strong Buy) but an Earnings ESP of -12.28%, making surprise prediction difficult.

Stocks With Favorable Combination

Here are some better-ranked companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:

Crocs CROX has an Earnings ESP of +57.14% and a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .

Deckers Outdoor Corporation DECK has an Earnings ESP of +4.85% and a Zacks Rank #1.

Callaway Golf Company ELY has an Earnings ESP of +71.42% and a Zacks Rank #2.

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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 Nasdaq, Inc.

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

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