Rent-A-Center (RCII) to Report Q3 Earnings: What's in Store?

Rent-A-Center, Inc. RCII is scheduled to report third-quarter 2020 numbers on Oct 28, after market close. Although the Zacks Consensus Estimate for third-quarter earnings was stable in the past 30 days at $1.01, the same suggests significant growth from 47 cents reported in the year-ago quarter. Moreover, the consensus estimate for quarterly revenues is pegged at $703 million, which indicates an increase of more than 8% from the year-ago quarter’s tally.

Notably, the rent-to-own company has delivered an earnings surprise of 10.7% in the last four quarters, on average.

Key Factors

A resilient business model, focus on innovation and continuous expansion in technology have been aiding Rent-A-Center’s performance. Strength in the company’s Rent-A-Center Business and Preferred Lease segments might have driven the company’s third-quarter results. Impressive lease-portfolio performance and customer-payment activity have been driving both businesses. As a result, management issued an upbeat outlook for the third quarter and raised the outlook for 2020 on Sep 21.

For the quarter under review, Rent-A-Center projected consolidated revenues between $695 million and $715 million. The company guided adjusted EBITDA in the range of $85-$95 million. Markedly, management forecast adjusted earnings in the band of 95 cents to $1.05 per share.

The company also provided views on the performance of Rent-A-Center and Preferred Lease segments for the third quarter. In respect of the Rent-A-Center business, the company projected revenues between $465 million and $475 million, with same-store sales in the band of 10-12%. For the Preferred Lease business, the company guided revenues in the range of $190-$200 million. Management projected an increase of 35% in invoice volume for the segment for the third quarter on a year-on-year basis.

Undeniably, Rent-A-Center has been making investments to enhance the omni-channel platform to provide customers a seamless approach across channels, markets, products and brands. The company has been taking initiatives to manage orders more efficiently, lower losses and cut operating costs. These are likely to get reflected in the company’s third-quarter results.

What Our Zacks Model Says

Our proven model does not conclusively predict an earnings beat for Rent-A-Center this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

RentACenter, Inc. Price and EPS Surprise

RentACenter, Inc. Price and EPS Surprise

RentACenter, Inc. price-eps-surprise | RentACenter, Inc. Quote

Rent-A-Center has an Earnings ESP of 0.00% and a Zacks Rank #1.

Stocks Poised to Beat Earnings Estimates

Here are a few companies you may want to consider, as our model shows that these have the right combination to post an earnings beat:

Crocs CROX has an Earnings ESP of +2.56% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Wolverine WWW has an Earnings ESP of +17.86% and a Zacks Rank #2.

Gap GPS has an Earnings ESP of +12.68% and a Zacks Rank #3.

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