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 $11.1 million.
  • RCII has traded 89,257 shares today.
  • RCII is trading at 2.36 times the normal volume for the stock at this time of day.
  • RCII is trading at a new low 3.02% 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 through four segments: Core U.S., Acceptance Now, Mexico, and Franchising. The stock currently has a dividend yield of 2.4%. Currently there is 1 analyst that rates Rent-A-Center a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Rent-A-Center has been 802,400 shares per day over the past 30 days. Rent-A-Center has a market cap of $704.0 million and is part of the services sector and diversified services industry. The stock has a beta of 0.62 and a short float of 16.3% with 7.43 days to cover. Shares are down 27.1% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Rent-A-Center as a

sell

. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

Highlights from the ratings report include:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Specialty Retail industry. The net income has significantly decreased by 57.0% when compared to the same quarter one year ago, falling from $23.15 million to $9.95 million.
  • The debt-to-equity ratio of 1.44 is relatively high when compared with the industry average, suggesting a need for better debt level management.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Specialty Retail industry and the overall market, RENT-A-CENTER INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 49.66%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 55.81% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • RENT-A-CENTER INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, RENT-A-CENTER INC swung to a loss, reporting -$16.34 versus $1.81 in the prior year. This year, the market expects an improvement in earnings ($2.00 versus -$16.34).

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