Rent-A-Center Stock Higher After Buyback, Dividend Increases
Rent-A-Center (RCII) - Get Rent-A-Center Inc Report shares rose Friday after the household-goods rental company authorized $500 million of share buybacks and a 10% dividend increase.
The buyback moves comes after completion of a previous $250 million authorization from August.
The dividend, payable to shareholders of record Dec. 16, will be 34 cents a share, up from 31 cents the prior quarter.
Rent-A-Center recently traded at $45.84, up 2%. It has gained 19% year to date, but has slumped 29% over the past three months.
Many retail investors’ favorite furniture company is Boston-based Wayfair (W) - Get Wayfair, Inc. Class A Report, which recently traded at $234, down 1%. It has climbed 4% year to date, but has slid 15% over the past three months.
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Morningstar analyst Jaime Katz puts fair value for Wayfair at $120 and assigns it no moat.
“Given Wayfair’s lifecycle position, with significant growth potential but also corresponding expenses to achieve market-share gains, we expect return on invested capital to be volatile,” she wrote in a commentary last month.
“We think Wayfair can hit some of its long-term goals, but the duration of execution to achievement is trickier.
“While it plans to exceed its prior 25% to 27% gross margin target longer term (we forecast 28%), we forecast operating expenses won’t fall in management's goal of 15% to 19% of sales until 2030 (when we forecast 18.5%).
“We plan to watch postpandemic customer-acquisition cost trends to determine whether Wayfair could develop a network effect.”
To be sure, “Wayfair continues to take share in the fragmented home-goods market, which it believes represents a $840 billion global opportunity between North America and Europe,” Lash said.
