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What's in Store for Rent-A-Center (RCII) in Q1 Earnings?

Zacks Equity Research

Rent-A-Center, Inc. RCII is scheduled to report first-quarter 2019 numbers on May 6, after the market close. Notably, this Texas-based company had reported higher earnings in the preceding three quarters and also comfortably surpassed the Zacks Consensus Estimate. In the last-reported quarter, the company delivered a positive earnings surprise of 84.2%. Let’s see what awaits this quarterly release.

How Are Estimates Faring?

The Zacks Consensus Estimate for first-quarter earnings is pegged at 30 cents, which portrays a significant improvement from a loss of 8 cents per share, reported in the year-ago quarter. The consensus mark has moved north by a penny over the past 30 days. For revenues, the consensus mark stands at $683.1 million, which reflects a decline of 2.2% from $698 million, reported in the year-ago period.

Rent-A-Center, Inc. Price, Consensus and EPS Surprise

Rent-A-Center, Inc. Price, Consensus and EPS Surprise | Rent-A-Center, Inc. Quote

Factors Likely to Influence the Performance

Rent-A-Center’s focus on enhancing omni-channel platform facilitates customers to have a seamless approach across channels, markets, retailers, products and brands. In sync with this, the company is increasing e-commerce offerings and mobile applications. It is also leveraging the cloud-based point-of-sale platform to manage orders more efficiently, lower losses and cut operating costs. These are likely to have a favourable impact on the company’s bottom line.

Apart from this, the company’s Acceptance Now business model is gaining traction as it enhances consumers’ shopping experience. Also, management has undertaken initiatives to strengthen the performance of its Core U.S. segment. In an attempt to augment cash flow generation from Core U.S. business, the company is focusing on rates, terms and purchase options that are much more aligned with the customer’s needs. Rent-A-Center is also optimizing product mix, increasing the average ticket price, upgrading workforce, concentrating on lowering delinquency rates and rationalizing the store base.

What Our Model Says

Our proven model does show that Rent-A-Center is likely to beat estimates this quarter. This is because a stock needs to have both — a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP— for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Rent-A-Center has a Zacks Rank #1 and Earnings ESP of +21.98%, which makes us confident of a beat. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks With Favorable Combination

Here are some other companies you may want to consider as our model shows that these too have the right combination of elements to post earnings beat.

Estee Lauder EL has an Earnings ESP of +0.77% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dollar General DG has an Earnings ESP of +1.51% and a Zacks Rank #3.

Hanesbrands HBI has an Earnings ESP of +3.18% and a Zacks Rank #3.

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The Estee Lauder Companies Inc. (EL) : Free Stock Analysis Report
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