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Upbound Group, Inc. (UPBD - Free Report) posted its third-quarter 2024 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate. Also, the company’s revenues and earnings increased year over year. Following the impressive results, this Plano, TX-based company raised its 2024 guidance. Consequently, UPBD shares rose 8% during the trading session yesterday.
Upbound’s third-quarter results underscore the positive influence of its differentiated model, delivering consistent top and bottom-line growth across the Acima and Rent-A-Center segments. The company has strengthened its operating strategies and enhanced digital capabilities to optimize the omnichannel experience for consumers amid a rapidly changing economic environment.
Upbound Group, Inc. Price, Consensus and EPS Surprise
UPBD posted adjusted earnings of 95 cents per share, surpassing the Zacks Consensus Estimate of 89 cents. Also, the bottom line increased from 79 cents in the year-ago quarter.
Total revenues of $1,068.9 million surpassed the consensus estimate of $1,047 million. The metric increased 9.2% year over year due to growth in rental and fee revenues, and merchandise sales revenues.
Adjusted EBITDA was $116.9 million, up 10.3% year over year. This increase was driven by growth in both Acima and Rent-A-Center segments, along with reduced corporate expenses.
The company’s adjusted EBITDA margin increased 10 basis points (bps) year over year to 10.9%. This improvement was primarily driven by a higher Adjusted EBITDA margin in the Rent-A-Center segment, partially offset by a decline in the Acima segment.
Image Source: Zacks Investment Research
UPBD’s Q3 Segmental Details
Revenues in the Rent-A-Center segment increased 1.1% year over year to $458.7 million due to higher rentals and fees revenues. Same-store sales increased 2.6% year over year. The Zacks Consensus Estimate for the Rent-A-Center segment’s revenues was pegged at $453.1 million for the quarter.
This segment’s same-store lease portfolio value was flat year over year. The adjusted EBITDA margin was 16.3%, increasing 130 basis points from the prior year. Year-over-year increases in adjusted EBITDA and the adjusted EBITDA margin were partly attributed to reduced non-labor operating expenses. As of Sept. 30, 2024, the unit had 1,726 locations.
Revenues at the Acima segment (formerly known as the Preferred Lease segment) rose 19.1% year over year to $566.2 million due to growth in rentals and fee revenues, as well as merchandise sales revenues. The Zacks Consensus Estimate for the Acima segment’s revenues was pegged at $554.8 million for the quarter.
Also, the gross merchandise volume increased 13% due to an expansion of retail partner locations, productivity, and direct-to-consumer offerings. The segment’s adjusted EBITDA margin decreased 200 bps to 13.3% from 15.3% in the year-ago period.
The Zacks Rank #4 (Sell) company’s Franchising revenues decreased 18.6% year over year to $24.9 million due to lower inventory sales. As of Sept. 30, 2024, Rent-A-Center had 465 franchise-operated locations.
The Mexico segment’s revenues totaled $19 million, up 7.3% on a constant-currency basis. As of Sept. 30, 2024, the unit had 129 company-operated locations.
Upbound’s Financial Health Snapshot
The company ended the reported quarter with cash and cash equivalents of $85.1 million, net senior debt of $794.3 million, and stockholders' equity of $611.8 million.
UPBD’s 2024 Outlook
Upbound's strong financial performance in the third quarter is a positive sign for its prospects. It is well-positioned to continue growing in 2024 despite the challenging market conditions.
UPBD expects to generate consolidated revenues of $4.20-$4.30 billion in 2024 compared with the previously mentioned $4.10-$4.30 billion. It had reported revenues of $4 billion in 2023. Adjusted EBITDA, excluding stock-based compensation, is expected between $470 million and $480 million compared with the previously stated $465-$485 billion. In 2023, the company reported an adjusted EBITDA of $455.7 million.
Adjusted earnings for 2024 are expected to be $3.75-$3.90 per share compared with the previously stated $3.65-$4, whereas it reported $3.55 in 2023.
The company expects a free cash flow of $100-$130 million for 2024.
The stock has declined 14.5% in the past three months against the industry’s growth of 6.5%.
Eye These Solid Picks
Some better-ranked stocks in the same space are The Gap, Inc. (GAP - Free Report) , Nordstrom Inc. (JWN - Free Report) and Abercrombie & Fitch Co. (ANF - Free Report) .
The Gap is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products. It currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for The Gap’s fiscal 2024 earnings and sales indicates growth of 31.5% and 0.5%, respectively, from the year-ago actuals. GAP has a trailing four-quarter average earnings surprise of 142.8%.
Nordstrom is a leading fashion specialty retailer in the United States. The company offers an extensive selection of both branded and private-label merchandise. It currently has a Zacks Rank of 2 (Buy).
The Zacks Consensus Estimate for Nordstrom’s fiscal 2024 sales indicates growth of 0.6% from the fiscal 2023 reported figure. JWN has a negative trailing four-quarter average earnings surprise of 17.8%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. It carries a Zacks Rank of 2 at present. ANF delivered a 16.8% earnings surprise in the last reported quarter.
The consensus estimate for Abercrombie’s fiscal 2025 earnings and sales indicates growth of 63.4% and 13%, respectively, from the fiscal 2024 actuals. ANF has a trailing four-quarter average earnings surprise of 28%.
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UPBD Beats Earnings & Revenue Estimates in Q3, Raises 2024 Guidance
Upbound Group, Inc. (UPBD - Free Report) posted its third-quarter 2024 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate. Also, the company’s revenues and earnings increased year over year. Following the impressive results, this Plano, TX-based company raised its 2024 guidance. Consequently, UPBD shares rose 8% during the trading session yesterday.
Upbound’s third-quarter results underscore the positive influence of its differentiated model, delivering consistent top and bottom-line growth across the Acima and Rent-A-Center segments. The company has strengthened its operating strategies and enhanced digital capabilities to optimize the omnichannel experience for consumers amid a rapidly changing economic environment.
Upbound Group, Inc. Price, Consensus and EPS Surprise
Upbound Group, Inc. price-consensus-eps-surprise-chart | Upbound Group, Inc. Quote
Upbound’s Quarterly Performance: Key Insights
UPBD posted adjusted earnings of 95 cents per share, surpassing the Zacks Consensus Estimate of 89 cents. Also, the bottom line increased from 79 cents in the year-ago quarter.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Total revenues of $1,068.9 million surpassed the consensus estimate of $1,047 million. The metric increased 9.2% year over year due to growth in rental and fee revenues, and merchandise sales revenues.
Adjusted EBITDA was $116.9 million, up 10.3% year over year. This increase was driven by growth in both Acima and Rent-A-Center segments, along with reduced corporate expenses.
The company’s adjusted EBITDA margin increased 10 basis points (bps) year over year to 10.9%. This improvement was primarily driven by a higher Adjusted EBITDA margin in the Rent-A-Center segment, partially offset by a decline in the Acima segment.
Image Source: Zacks Investment Research
UPBD’s Q3 Segmental Details
Revenues in the Rent-A-Center segment increased 1.1% year over year to $458.7 million due to higher rentals and fees revenues. Same-store sales increased 2.6% year over year. The Zacks Consensus Estimate for the Rent-A-Center segment’s revenues was pegged at $453.1 million for the quarter.
This segment’s same-store lease portfolio value was flat year over year. The adjusted EBITDA margin was 16.3%, increasing 130 basis points from the prior year. Year-over-year increases in adjusted EBITDA and the adjusted EBITDA margin were partly attributed to reduced non-labor operating expenses. As of Sept. 30, 2024, the unit had 1,726 locations.
Revenues at the Acima segment (formerly known as the Preferred Lease segment) rose 19.1% year over year to $566.2 million due to growth in rentals and fee revenues, as well as merchandise sales revenues. The Zacks Consensus Estimate for the Acima segment’s revenues was pegged at $554.8 million for the quarter.
Also, the gross merchandise volume increased 13% due to an expansion of retail partner locations, productivity, and direct-to-consumer offerings. The segment’s adjusted EBITDA margin decreased 200 bps to 13.3% from 15.3% in the year-ago period.
The Zacks Rank #4 (Sell) company’s Franchising revenues decreased 18.6% year over year to $24.9 million due to lower inventory sales. As of Sept. 30, 2024, Rent-A-Center had 465 franchise-operated locations.
The Mexico segment’s revenues totaled $19 million, up 7.3% on a constant-currency basis. As of Sept. 30, 2024, the unit had 129 company-operated locations.
Upbound’s Financial Health Snapshot
The company ended the reported quarter with cash and cash equivalents of $85.1 million, net senior debt of $794.3 million, and stockholders' equity of $611.8 million.
UPBD’s 2024 Outlook
Upbound's strong financial performance in the third quarter is a positive sign for its prospects. It is well-positioned to continue growing in 2024 despite the challenging market conditions.
UPBD expects to generate consolidated revenues of $4.20-$4.30 billion in 2024 compared with the previously mentioned $4.10-$4.30 billion. It had reported revenues of $4 billion in 2023. Adjusted EBITDA, excluding stock-based compensation, is expected between $470 million and $480 million compared with the previously stated $465-$485 billion. In 2023, the company reported an adjusted EBITDA of $455.7 million.
Adjusted earnings for 2024 are expected to be $3.75-$3.90 per share compared with the previously stated $3.65-$4, whereas it reported $3.55 in 2023.
The company expects a free cash flow of $100-$130 million for 2024.
The stock has declined 14.5% in the past three months against the industry’s growth of 6.5%.
Eye These Solid Picks
Some better-ranked stocks in the same space are The Gap, Inc. (GAP - Free Report) , Nordstrom Inc. (JWN - Free Report) and Abercrombie & Fitch Co. (ANF - Free Report) .
The Gap is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products. It currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for The Gap’s fiscal 2024 earnings and sales indicates growth of 31.5% and 0.5%, respectively, from the year-ago actuals. GAP has a trailing four-quarter average earnings surprise of 142.8%.
Nordstrom is a leading fashion specialty retailer in the United States. The company offers an extensive selection of both branded and private-label merchandise. It currently has a Zacks Rank of 2 (Buy).
The Zacks Consensus Estimate for Nordstrom’s fiscal 2024 sales indicates growth of 0.6% from the fiscal 2023 reported figure. JWN has a negative trailing four-quarter average earnings surprise of 17.8%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. It carries a Zacks Rank of 2 at present. ANF delivered a 16.8% earnings surprise in the last reported quarter.
The consensus estimate for Abercrombie’s fiscal 2025 earnings and sales indicates growth of 63.4% and 13%, respectively, from the fiscal 2024 actuals. ANF has a trailing four-quarter average earnings surprise of 28%.