Why Rent-A-Center (RCII) Stock Is Up Today

NEW YORK (TheStreet) -- Rent-A-Center (RCII) shares are up 14% to $29.38 in trading on Tuesday.

The increase follows the release of the rent to own retailer's positive first quarter earnings report. 

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Total revenues for the first quarter were $833.7 million, a 1.8% increase from the year ago first quarter of $819.3 million. Revenue beat analysts estimates of $794.7 million by 4.9%. 

Adjusted net earnings per diluted share were 57 cents, missing analysts estimates of 60 cents per share for the quarter.

TheStreet Ratings team rates RENT-A-CENTER INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate RENT-A-CENTER INC (RCII) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • RCII's revenue growth has slightly outpaced the industry average of 6.5%. Since the same quarter one year prior, revenues slightly increased by 1.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The gross profit margin for RENT-A-CENTER INC is currently very high, coming in at 93.65%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 1.69% trails the industry average.
  • 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 72.5% when compared to the same quarter one year ago, falling from $47.46 million to $13.06 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness 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.
  • You can view the full analysis from the report here: RCII Ratings Report
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