U.S. Markets closed

Investing in Rent-A-Center (NASDAQ:RCII) five years ago would have delivered you a 147% gain

Simply Wall St
·3 min read

When you buy a stock there is always a possibility that it could drop 100%. But when you pick a company that is really flourishing, you can make more than 100%. For instance, the price of Rent-A-Center, Inc. (NASDAQ:RCII) stock is up an impressive 113% over the last five years. It's also good to see the share price up 38% over the last quarter.

Now it's worth having a look at the company's fundamentals too, because that will help us determine if the long term shareholder return has matched the performance of the underlying business.

View our latest analysis for Rent-A-Center

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

During the five years of share price growth, Rent-A-Center moved from a loss to profitability. That kind of transition can be an inflection point that justifies a strong share price gain, just as we have seen here.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

earnings-per-share-growth
earnings-per-share-growth

We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, Rent-A-Center's TSR for the last 5 years was 147%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

We regret to report that Rent-A-Center shareholders are down 41% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 15%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. On the bright side, long term shareholders have made money, with a gain of 20% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Even so, be aware that Rent-A-Center is showing 4 warning signs in our investment analysis , and 1 of those is potentially serious...

Rent-A-Center is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here

Recommended Stories

  • Schwab Hit by Worst Month Since 1987 Amid Cash Sorting Woes

    (Bloomberg) -- Charles Schwab Corp.’s worst month in more than 35 years has sparked a debate among analysts as to whether the brokerage giant has been unfairly punished by investors amid growing fears about the US banking sector.Most Read from BloombergParents Are Paying Consultants $750,000 to Get Kids Into Ivy League SchoolsTrump Faces Fingerprints, Mug Shot After Dramatic IndictmentSchwab Hit by Worst Month Since 1987 Amid Cash Sorting WoesChina Hits Micron With Review of Chips, Citing Securi

  • Seeking at Least 8% Dividend Yield? Goldman Sachs Suggests 2 Dividend Stocks to Buy

    One thing is certain in the stock markets lately: their inherent uncertainty is taking charge, and high volatility is here to stay. For months, investors and economists have worried about the recessionary effects of the Federal Reserve’s anti-inflationary interest rate hikes – but the recent bank crisis has added another layer of concern to an already tumultuous situation. Now, we’re dealing with the fallout from that crisis, and inflation and interest rates both remain high. It’s a textbook cas

  • US Power Plant Firm Goes Bankrupt After Winter Storm Penalties

    (Bloomberg) -- Lincoln Power LLC, the owner of two Illinois power plants, filed for bankruptcy after its financial strain was exacerbated by nearly $39 million in penalties levied by the biggest US electric-grid operator. Most Read from BloombergParents Are Paying Consultants $750,000 to Get Kids Into Ivy League SchoolsTrump Faces Fingerprints, Mug Shot After Dramatic IndictmentSchwab Hit by Worst Month Since 1987 Amid Cash Sorting WoesChina Hits Micron With Review of Chips, Citing Security Risk

  • Procrastinators, Rejoice: The 6.89% I bonds Will Beat the Old 9.62% Bonds in Just 4 Years

    With a yield of 9.62%, the recently expired Series I bond was understandably popular. With interest rates rising, bond funds are down this year and banks continue to offer miserly rates on deposit accounts. So it's no wonder that a … Continue reading → The post It Pays to Procrastinate: The New 6.89% I bonds Will Beat the Old 9.62% Bonds in Just 4 Years appeared first on SmartAsset Blog.

  • Nomura Says US Money Supply Plunge Is ‘Elephant in the Room’ for Markets

    (Bloomberg) -- A Nomura Holdings Inc. strategist is warning that investors are overlooking a crucial clue as they grapple with the path of US inflation and the Federal Reserve’s response. Most Read from BloombergTrump Faces Fingerprints, Mug Shot After Dramatic IndictmentWorld’s Top-Rated Airport Sees Immigration System RestoredHow King Charles Got Thrown Into Disney’s Fight With Florida Governor DeSantisTrump to Be Arraigned Next Week After Historic IndictmentStocks Rally as Traders Eye Peak Ra

  • Seven Dividend Stocks for Uncertain Economic Times

    Treasuries aren't the only refuge in a slowdown. Dividend names also "can provide a margin of safety," says UBS.

  • Altria Lays Out a Transition to Smokeless Products. But It Begins With the Dividend.

    The biggest cigarette company in the U.S. acknowledges that it has to move toward smokeless products. But to hold its shareholder base, it also knows it has to grow an already rich dividend.

  • A $200,000 Annuity Will Pay Out This Much a Month

    An annuity can be an appealing option to build your retirement nest egg. Adding guaranteed retirement income to your retirement can give you financial stability. But the exact amount that you'll get from an annuity each month will vary. Let's … Continue reading → The post How Much Does a $200,000 Annuity Pay Per Month? appeared first on SmartAsset Blog.

  • Baby Boomers, You Need This Much Money to Retire Comfortably

    The Baby Boomer generation is reaching retirement age in record numbers. With more Boomers retiring on a daily basis, it helps to understand how prepared they are to leave their jobs for good. In this article, we’ll discuss the average … Continue reading → The post Average Retirement Savings for Baby Boomers appeared first on SmartAsset Blog.

  • Dow Jones Rises 150 Points After Cool Inflation Data; 6 Stocks To Buy And Watch

    The Dow Jones rose Friday after key inflation data, with the release of the PCE price index, the Fed's preferred measure of inflation.

  • Virgin Orbit’s sudden collapse is the latest in a series of high-risk failures by Richard Branson

    The satellite deployment startup founded by Branson is letting go of the bulk of its staff, citing an “inability to secure meaningful funding.”

  • Japan's Toyota hands St Petersburg plant over to Russian state

    MOSCOW (Reuters) -Russia and Toyota said on Friday that the Japanese carmaker's factory in St Petersburg had been handed over to state entity NAMI, with Moscow snapping up more assets from global automakers leaving Russia over the conflict in Ukraine. "Toyota's production site in St Petersburg has... been transferred to the state," Russia's Ministry of Industry and Trade said in a statement. The company said in September it had decided to stop vehicle production in Russia due to the interruption in supplies of key materials and parts.

  • Three Stocks Turn $10,000 To $25,265 In Just 3 Months

    Investors enjoyed a small S&P 500 rally in March. But there were much more lucrative places to put money in the month.

  • How to make $100,000 or more and pay no income taxes

    Here’s how to earn a six-figure income and pay no income taxes on it – totally legally.

  • The Newest ‘Bubble’ Is in Money-Market Funds

    People are rushing into money-market funds. Total assets held in money-market funds, which are investment vehicles that buy cash-like securities such as short-term Treasury bills, recently reached close to $5.5 trillion, according to RBC. Earlier this year, money-market fund assets stood at roughly $4.5 trillion, a level at which people stopped pouring more money into those funds a few times in the past few years, opting instead to buy other assets like stocks.

  • Depositors yank another $126 billion from US banks

    Customers withdrew another $126 billion the week ending March 22, bringing total industry deposits to their lowest level since July 2021.

  • The 10 best 1-year CD rates for April 2023

    Check out the CDs that made our top 10 list based on their APY, minimum opening deposit, compounding frequency, and customer service.

  • Here’s What Retirement Looks Like in America in Six Charts

    Americans spend decades saving for retirement, never quite sure how much is enough or what sort of life that money will ultimately buy. To benchmark your retirement plans—including your savings and spending and how you spend your time—one place to start is by looking at how your numbers stack up against Americans overall. The biggest source of retirement income for many Americans is the nest egg built up during their careers.

  • Schwab ETF Logs $4.6 Billion Inflow Amid Quarter-End Shuffle

    (Bloomberg) -- Wall Street’s model-portfolio boom appears to have flashed its invisible power for the second time in this week after a once-sleepy Charles Schwab Corp. bond exchange-traded fund received another monster inflow.Most Read from BloombergParents Are Paying Consultants $750,000 to Get Kids Into Ivy League SchoolsTrump Faces Fingerprints, Mug Shot After Dramatic IndictmentSchwab Hit by Worst Month Since 1987 Amid Cash Sorting WoesChina Hits Micron With Review of Chips, Citing Security

  • ZIM Integrated Shipping Services (ZIM) Stock Sinks As Market Gains: What You Should Know

    In the latest trading session, ZIM Integrated Shipping Services (ZIM) closed at $23.58, marking a -1.71% move from the previous day.