Trade-Ideas LLC identified

Aaron's

(

AAN

) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Aaron's as such a stock due to the following factors:

  • AAN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $23.7 million.
  • AAN has traded 827,152 shares today.
  • AAN is down 3% today.
  • AAN was up 6.5% yesterday.

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More details on AAN:

Aaron's, Inc. operates as a specialty retailer of furniture, consumer electronics, computers, appliances, and household accessories in the United States and Canada. The company operates in five segments: Sales and Lease Ownership, Progressive, HomeSmart, Franchise, and Manufacturing. The stock currently has a dividend yield of 0.5%. AAN has a PE ratio of 12. Currently there are 2 analysts that rate Aaron's a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Aaron's has been 1.0 million shares per day over the past 30 days. Aaron's has a market cap of $1.5 billion and is part of the services sector and diversified services industry. The stock has a beta of 0.08 and a short float of 6.7% with 2.80 days to cover. Shares are unchanged year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Aaron's as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • AAN's revenue growth has slightly outpaced the industry average of 4.5%. Since the same quarter one year prior, revenues slightly increased by 9.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.37, is low and is below the industry average, implying that there has been successful management of debt levels.
  • AARON'S INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, AARON'S INC reported lower earnings of $1.08 versus $1.59 in the prior year. This year, the market expects an improvement in earnings ($2.12 versus $1.08).
  • AAN's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 29.91%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • Net operating cash flow has significantly decreased to -$6.04 million or 137.97% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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