Ahead of the Bell: Aaron's

Analysts cut earnings predictions for Aaron's after company cuts outlook

Associated Press

NEW YORK (AP) -- Several analysts cut their earnings estimates for Aaron's Inc. after the company lowered its third-quarter forecasts because of difficulty bringing more customers into its stores.

CEO Ronald Allen said before the markets opened Friday that the company's shoppers are still struggling with economic conditions. Product shipments to franchised stores also dropped from a year ago.

Aaron's, which leases and sells furniture, electronics, home appliances and accessories, said it now expects an adjusted third-quarter profit of 37 cents to 41 cents per share, down from its previous prediction of 48 cents to 52 cents per share. It cut its revenue outlook to $540 million from $550 million.

Analysts, on average, were expecting earnings of 49 cents per share on revenue of $547.4 million prior to the company's move, according to FactSet.

However, the company also increased its planned share repurchases by 11 million to 15 million. That helped the stock rise on Friday by 15 cents to $27.75, in trading about five times heavier than normal. The stock remains down nearly 2 percent since the start of the year.

Monday, Stifel Nicolaus analyst John Baugh backed his "Hold" rating for the stock. He said that the company's main problem remains getting customers into stores and generating new rental agreements, noting that its comparable store revenue has shrunk for the past four quarters, which is a sign that the problem has been developing for a while.

He cut his 2013 profit prediction by 16 cents to $1.99 and his 2014 profit prediction by 24 cents to $2.20.

Meanwhile, Sterne Agee analyst Arvind Bhatia backed his "Neutral" rating for the stock, but cut his 2013 profit prediction by 13 cents to $2 per share and his 2014 earnings estimate by 22 cents to $2.16 per share.

Canaacord Genuity analyst Laura Champine said the company is looking to revive demand by increasing promotions in the fourth quarter. She kept a "Hold" rating and also lowered estimates, now forecasting $2.02 per share for the year.

On average, analysts expect 2013 and 2014 per-share profits of $2.07 and $2.30, respectively.

View Comments