Rent-A-Center (RCII) Stock: Weak On High Volume Today - TheStreet

Trade-Ideas LLC identified

Rent-A-Center

(

RCII

) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Rent-A-Center as such a stock due to the following factors:

  • RCII has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $13.1 million.
  • RCII has traded 2.2 million shares today.
  • RCII is trading at 115.06 times the normal volume for the stock at this time of day.
  • RCII is trading at a new low 24.01% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize (or avoid losses by trimming weak positions). In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on RCII:

Rent-A-Center, Inc., together with its subsidiaries, leases household durable goods to customers on a rent-to-own basis. The company operates in four segments: Core U.S., Acceptance Now, Mexico, and Franchising. The stock currently has a dividend yield of 3.8%. RCII has a PE ratio of 13. Currently there are 4 analysts that rate Rent-A-Center a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Rent-A-Center has been 601,000 shares per day over the past 30 days. Rent-A-Center has a market cap of $1.4 billion and is part of the services sector and diversified services industry. The stock has a beta of 0.72 and a short float of 18.5% with 12.46 days to cover. Shares are down 29.5% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Rent-A-Center as a

hold

. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.

Highlights from the ratings report include:

  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Specialty Retail industry average. The net income increased by 30.9% when compared to the same quarter one year prior, rising from $17.68 million to $23.15 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.8%. Since the same quarter one year prior, revenues slightly increased by 6.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • RENT-A-CENTER INC has improved earnings per share by 30.3% 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, RENT-A-CENTER INC reported lower earnings of $1.81 versus $2.31 in the prior year. This year, the market expects an improvement in earnings ($2.14 versus $1.81).
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Specialty Retail industry and the overall market, RENT-A-CENTER INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • RCII has underperformed the S&P 500 Index, declining 12.27% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.

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