We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why Is Aaron's (AAN) Down 0.6% Since Last Earnings Report?
Read MoreHide Full Article
A month has gone by since the last earnings report for Aaron's Company, Inc. . Shares have lost about 0.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Aaron's due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Aaron's Reports Q2 Loss, Lower Revenues at Both Segments
Aaron's reported a loss per share with revenues missing the Zacks Consensus Estimate in the second quarter of 2024. Also, both metrics declined year over year.
Aaron's adjusted loss of 7 cents per share missed the Zacks Consensus Estimate of earnings of 3 cents. The company’s bottom line compared unfavorably with adjusted earnings of 39 cents per share in the year-ago quarter.
Consolidated revenues dipped 5.1% to $503.1 million, due to soft lease revenues and fees at Aaron's business, and a dip in retail sales. The figure lagged the Zacks Consensus Estimate of $510 million.
More Details
Breaking up the components of consolidated revenues, lease revenues and fees dropped 5.1% year over year to $335.7 million, and retail sales fell 5.7% to $139.5 million. Non-retail sales, which mainly include merchandise sales to franchisees, slipped 3.1% year over year to $22.1 million, while franchise royalties and other revenues inched up 1.7% to $5.9 million from the year-ago quarter. E-commerce recurring revenues written grew 79.4% due to gains from the new omnichannel lease decisions and customer acquisition program.
In the Aaron’s business segment, revenues declined 5% year over year to $369.4 million due to a 2% dip in the lease portfolio size at the end of the quarter and a reduction of 140 basis points (bps) in the lease renewal rate to 86.8%. Same-store lease portfolio size grew 1.6% year over year against a dip of 6.5% in the year-ago quarter. For the second quarter, our model had predicted Aaron’s business unit’s revenues to be $369.1 million, indicating a year-over-year drop of 5.1%.
In the BrandsMart segment, revenues decreased 5.8% to $135.4 million, mainly due to a 7.3% dip in comparable sales. The decline in comparable sales was attributed to soft customer traffic. Our estimate for BrandsMart segment’s revenues was $142.2 million, reflecting a year-over-year decline of 1.1%.
Margins
Aaron’s gross profit dipped 3.6% year over year to $272 million while the gross margin expanded 90 bps to 54.1%. In the second quarter, the company reported an operating loss of $12.3 million against the year-ago quarter’s operating profit of $11.3 million. We had expected gross profit of $268.2 million, down 5% year over year.
Adjusted EBITDA declined 42.2% year over year to $24.5 million due to lower adjusted EBITDA at both segments. The adjusted EBITDA margin declined 310 bps to 4.9%. We had estimated adjusted EBITDA of $28 million with an adjusted EBITDA margin of 5.5%.
Financial Position
Aaron’s, which has agreed to be acquired by IQVentures for $10.10 per share in cash, or an enterprise value of around $504 million, ended the quarter with cash and cash equivalents of $34.2 million, net debt of $181.6 million and shareholders’ equity of $657.7 million. In first-half 2024, it used $6.9 million of cash from operating activities.
At the end of the second quarter, the company generated a negative adjusted free cash flow of $39.2 million. Capital expenditure was $40.3 million in the first six months ended Jun 30.
It paid out dividends of $3.8 million in the second quarter. Concurrently, the company’s board has declared a regular quarterly cash dividend of 12.5 cents per share, payable on Oct 3, 2024, to shareholders of record as of Sep 13, 2024.
Due to the pending IQVentures deal, which is likely to be concluded by the year’s end, Aaron’s has withdrawn its 2024 view.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -16.13% due to these changes.
VGM Scores
At this time, Aaron's has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Aaron's has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Aaron's is part of the Zacks Consumer Services - Miscellaneous industry. Over the past month, Cimpress (CMPR - Free Report) , a stock from the same industry, has gained 13.4%. The company reported its results for the quarter ended June 2024 more than a month ago.
Cimpress reported revenues of $832.61 million in the last reported quarter, representing a year-over-year change of +5.6%. EPS of $4.33 for the same period compares with $1.08 a year ago.
Cimpress is expected to post earnings of $0.30 per share for the current quarter, representing a year-over-year change of +76.5%. Over the last 30 days, the Zacks Consensus Estimate has changed -14.3%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Cimpress. Also, the stock has a VGM Score of A.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Why Is Aaron's (AAN) Down 0.6% Since Last Earnings Report?
A month has gone by since the last earnings report for Aaron's Company, Inc. . Shares have lost about 0.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Aaron's due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Aaron's Reports Q2 Loss, Lower Revenues at Both Segments
Aaron's reported a loss per share with revenues missing the Zacks Consensus Estimate in the second quarter of 2024. Also, both metrics declined year over year.
Aaron's adjusted loss of 7 cents per share missed the Zacks Consensus Estimate of earnings of 3 cents. The company’s bottom line compared unfavorably with adjusted earnings of 39 cents per share in the year-ago quarter.
Consolidated revenues dipped 5.1% to $503.1 million, due to soft lease revenues and fees at Aaron's business, and a dip in retail sales. The figure lagged the Zacks Consensus Estimate of $510 million.
More Details
Breaking up the components of consolidated revenues, lease revenues and fees dropped 5.1% year over year to $335.7 million, and retail sales fell 5.7% to $139.5 million. Non-retail sales, which mainly include merchandise sales to franchisees, slipped 3.1% year over year to $22.1 million, while franchise royalties and other revenues inched up 1.7% to $5.9 million from the year-ago quarter. E-commerce recurring revenues written grew 79.4% due to gains from the new omnichannel lease decisions and customer acquisition program.
In the Aaron’s business segment, revenues declined 5% year over year to $369.4 million due to a 2% dip in the lease portfolio size at the end of the quarter and a reduction of 140 basis points (bps) in the lease renewal rate to 86.8%. Same-store lease portfolio size grew 1.6% year over year against a dip of 6.5% in the year-ago quarter. For the second quarter, our model had predicted Aaron’s business unit’s revenues to be $369.1 million, indicating a year-over-year drop of 5.1%.
In the BrandsMart segment, revenues decreased 5.8% to $135.4 million, mainly due to a 7.3% dip in comparable sales. The decline in comparable sales was attributed to soft customer traffic. Our estimate for BrandsMart segment’s revenues was $142.2 million, reflecting a year-over-year decline of 1.1%.
Margins
Aaron’s gross profit dipped 3.6% year over year to $272 million while the gross margin expanded 90 bps to 54.1%. In the second quarter, the company reported an operating loss of $12.3 million against the year-ago quarter’s operating profit of $11.3 million. We had expected gross profit of $268.2 million, down 5% year over year.
Adjusted EBITDA declined 42.2% year over year to $24.5 million due to lower adjusted EBITDA at both segments. The adjusted EBITDA margin declined 310 bps to 4.9%. We had estimated adjusted EBITDA of $28 million with an adjusted EBITDA margin of 5.5%.
Financial Position
Aaron’s, which has agreed to be acquired by IQVentures for $10.10 per share in cash, or an enterprise value of around $504 million, ended the quarter with cash and cash equivalents of $34.2 million, net debt of $181.6 million and shareholders’ equity of $657.7 million. In first-half 2024, it used $6.9 million of cash from operating activities.
At the end of the second quarter, the company generated a negative adjusted free cash flow of $39.2 million. Capital expenditure was $40.3 million in the first six months ended Jun 30.
It paid out dividends of $3.8 million in the second quarter. Concurrently, the company’s board has declared a regular quarterly cash dividend of 12.5 cents per share, payable on Oct 3, 2024, to shareholders of record as of Sep 13, 2024.
Due to the pending IQVentures deal, which is likely to be concluded by the year’s end, Aaron’s has withdrawn its 2024 view.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -16.13% due to these changes.
VGM Scores
At this time, Aaron's has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Aaron's has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Aaron's is part of the Zacks Consumer Services - Miscellaneous industry. Over the past month, Cimpress (CMPR - Free Report) , a stock from the same industry, has gained 13.4%. The company reported its results for the quarter ended June 2024 more than a month ago.
Cimpress reported revenues of $832.61 million in the last reported quarter, representing a year-over-year change of +5.6%. EPS of $4.33 for the same period compares with $1.08 a year ago.
Cimpress is expected to post earnings of $0.30 per share for the current quarter, representing a year-over-year change of +76.5%. Over the last 30 days, the Zacks Consensus Estimate has changed -14.3%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Cimpress. Also, the stock has a VGM Score of A.