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

Zacks Equity Research

In the latest trading session, Rent-A-Center (RCII) closed at $26.36, marking a -0.42% move from the previous day. This change lagged the S&P 500's daily gain of 0.36%. At the same time, the Dow added 0.01%, and the tech-heavy Nasdaq gained 0.27%.

Coming into today, shares of the company that leases furniture and appliances with an option to buy had gained 5.21% in the past month. In that same time, the Consumer Discretionary sector gained 2.92%, while the S&P 500 gained 3.98%.

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 $0.56 per share, which would represent year-over-year growth of 19.15%. Meanwhile, our latest consensus estimate is calling for revenue of $641.66 million, down 2.15% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $2.12 per share and revenue of $2.61 billion, which would represent changes of +100% and -1.83%, 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. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

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 currently has a Zacks Rank of #2 (Buy).

Digging into valuation, RCII currently has a Forward P/E ratio of 12.47. Its industry sports an average Forward P/E of 15.66, 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 group has a Zacks Industry Rank of 20, putting it in the top 8% 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.

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


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