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Rent-A-Center (RCII) Gains But Lags Market: What You Should Know

Zacks Equity Research

Rent-A-Center (RCII) closed at $25.93 in the latest trading session, marking a +0.29% move from the prior day. The stock lagged the S&P 500's daily gain of 0.64%. Elsewhere, the Dow gained 0.57%, while the tech-heavy Nasdaq added 0.6%.

Prior to today's trading, shares of the company that leases furniture and appliances with an option to buy had gained 0.04% over the past month. This has outpaced the Consumer Discretionary sector's loss of 5.09% and the S&P 500's loss of 1.87% in that time.

Investors will be hoping for strength from RCII as it approaches its next earnings release. On that day, RCII is projected to report earnings of $0.50 per share, which would represent year-over-year growth of 56.25%. Our most recent consensus estimate is calling for quarterly revenue of $628.29 million, down 2.58% from the year-ago period.

RCII's full-year Zacks Consensus Estimates are calling for earnings of $2.27 per share and revenue of $2.62 billion. These results would represent year-over-year changes of +114.15% and -1.6%, respectively.

It is also important to note the recent changes to analyst estimates for RCII. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.06% higher. RCII currently has a Zacks Rank of #2 (Buy).

Looking at its valuation, RCII is holding a Forward P/E ratio of 11.41. Its industry sports an average Forward P/E of 14.2, so we one might conclude that RCII is trading at a discount comparatively.

The Consumer Services - Miscellaneous industry is part of the Consumer Discretionary sector. This industry currently has a Zacks Industry Rank of 30, which puts it in the top 12% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.

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