U.S. Markets close in 4 hrs 52 mins

Aaron's Outlook Improves As Rent-A-Center Woes Persist

Brett Hershman

With its Progressive financial segment poised for growth, specialty retailer Aaron’s, Inc. (NYSE: AAN) was upgraded Wednesday by Loop Capital. Competitor Rent-A-Center (NASDAQ: RCII) rejected a 3 million buyout offer on Wednesday.

The Analyst

Loop Capital's Anthony Chukumba.

The Rating:

Chukumba upgraded Aaron’s from Hold to Buy rating, but kept his price target at $42 on the lease-to-own retailer. (See Chukumba's track record here.)

The Thesis

Aaron’s recent acquisitions of Progressive Financial and SEI are proving to be accretive transactions for the company, according to Loop Capital. 

“We continue to be impressed by Progressive’s revenue growth, and think Progressive will benefit from Rent-A-Center’s ongoing travails. We also believe the recent SEI acquisition will drive improved results in the Aaron’s Business division,” Chukumba said. 

While shares have been on a recent downtrend following a third-quarter earnings miss in October, the miss was not as bad as it looked, Chukumba said, noting that Aaron's does not provide quarterly guidance. "We thinks sell-side expectations were simply too optimistic," he said. 

Price action

Shares of Aaron’s were trading up more than 4 percent following the upgrade; shares were trading at $35.99.

Related Links: 

3 Factors Stacking Up Against Rent-A-Center

Retail Stocks With The Highest Short Interest

Photo courtesy of Rent-A-Center.

Latest Ratings for AAN

Date Firm Action From To
Nov 2017 Loop Capital Upgrades Hold Buy
Oct 2017 Janney Capital Initiates Coverage On Neutral
Sep 2017 KeyBanc Upgrades Sector Weight Overweight

View More Analyst Ratings for AAN
View the Latest Analyst Ratings

See more from Benzinga

© 2017 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.