U.S. Markets closed

Is Rent-A-Center (RCII) Stock Undervalued Right Now?

Zacks Equity Research

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One company value investors might notice is Rent-A-Center (RCII). RCII is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock has a Forward P/E ratio of 11.42. This compares to its industry's average Forward P/E of 15.51. Over the last 12 months, RCII's Forward P/E has been as high as 18.02 and as low as 9.32, with a median of 11.61.

Another valuation metric that we should highlight is RCII's P/B ratio of 4.86. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. RCII's current P/B looks attractive when compared to its industry's average P/B of 7.75. RCII's P/B has been as high as 5.11 and as low as 2.46, with a median of 3.29, over the past year.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. RCII has a P/S ratio of 0.54. This compares to its industry's average P/S of 0.84.

These are just a handful of the figures considered in Rent-A-Center's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that RCII is an impressive value stock right now.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Rent-A-Center, Inc. (RCII) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research