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Rent-A-Center (RCII) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research
In the latest trading session, Alphabet (GOOGL) closed at $1,153.46, marking a +0.26% move from the previous day.

Rent-A-Center (RCII) closed at $21.08 in the latest trading session, marking a +1.3% move from the prior day. The stock outpaced the S&P 500's daily gain of 0.22%. Elsewhere, the Dow gained 0.15%, 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 5.63% over the past month. This has outpaced the Consumer Discretionary sector's loss of 0.05% and the S&P 500's gain of 2.39% in that time.

Investors will be hoping for strength from RCII as it approaches its next earnings release. In that report, analysts expect RCII to post earnings of $0.29 per share. This would mark year-over-year growth of 462.5%. Meanwhile, our latest consensus estimate is calling for revenue of $680.04 million, down 2.58% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $1.88 per share and revenue of $2.61 billion, which would represent changes of +77.36% and -1.95%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for RCII. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. RCII is currently sporting a Zacks Rank of #1 (Strong Buy).

Valuation is also important, so investors should note that RCII has a Forward P/E ratio of 11.06 right now. For comparison, its industry has an average Forward P/E of 12.86, which means RCII is trading at a discount to the group.

The Consumer Services - Miscellaneous industry is part of the Consumer Discretionary sector. This industry currently has a Zacks Industry Rank of 104, which puts it in the top 41% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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.

To follow RCII in the coming trading sessions, be sure to utilize Zacks.com.

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