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Rent-A-Center Strong on E-Commerce & Preferred Lease Unit
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Where several companies are battling coronavirus jitters, investors are looking for stocks that could pay them higher returns. Here is one such stock, Rent-A-Center, Inc. , the leading rent-to-own operator, which is now a feasible investment choice.
Defying pandemic fears, the Plano, TX-based company’s shares have surged 61.7% and outperformed the industry’s 16% gain in the past three months. The industry is currently placed at the top 32% of all the Zacks classified industries. The Zacks Rank #3 (Hold) stock’s solid run on bourses is further justified by a VGM Score of A. Strength in the company’s e-commerce initiatives and Preferred Lease segment has been contributing to its performance.
Let’s Explore
Rent-A-Center put up a stellar first-quarter 2020, wherein the top and the bottom lines beat the Zacks Consensus Estimate and grew year over year. While the company’s earnings marked the second straight beat, sales beat estimates for the third consecutive time. Sturdy performance in the quarter was buoyed by a robust e-commerce performance. The company has been implementing curbside pickup, which has been gaining huge popularity and has now become the effective way to meet customers’ demands in the wake of coronavirus crisis. In fact, the company experienced solid momentum in April, thanks to higher e-commerce sales. It witnessed e-commerce growth of more than 100% in the month as compared to the prior year. This is likely to boost overall sales in the second quarter.
Meanwhile, the company is investing in enhancing its omni-channel platform so that customers can experience a seamless approach across channels, marketsproducts and brands. The company is increasing e-commerce offerings and mobile applications, apart from implementing additional e-commerce functionality to drive performance.
In addition, Rent-A-Center’s Acceptance Now’ business model is gaining traction as it enhances consumers’ shopping experience. Moreover, the buyout of Merchants Preferred, a nationwide virtual rent-to-own provider, enhances the company’s rent-to-own capabilities and allows it to provide both virtual and staffed solutions.
Notably, revenues at Acceptance Now, which is now known as Preferred Lease segment, grew 10% to $216.1 million in the first quarter, driven by higher invoice volumes and contributions from the buyout of Merchants Preferred. Invoice volumes rose 16.9% to $150.5 million.
Adding to such positives, Rent-A-Center expects sequential growth in cash flow for the second quarter of 2020 and strong profit margin for the year. It also expects a favorable trend in lease-to-own as primary and subprime lenders tightened credit measures.
HR Block (HRB - Free Report) , also a Zacks Rank #1 stock, has a long-term earnings growth rate of 10%.
Duluth Holdings (DLTH - Free Report) has an average trailing four-quarter positive earnings surprise of 19.3% and a Zacks Rank #2 (Buy).
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.1% per year.
These 7 were selected because of their superior potential for immediate breakout.
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Rent-A-Center Strong on E-Commerce & Preferred Lease Unit
Where several companies are battling coronavirus jitters, investors are looking for stocks that could pay them higher returns. Here is one such stock, Rent-A-Center, Inc. , the leading rent-to-own operator, which is now a feasible investment choice.
Defying pandemic fears, the Plano, TX-based company’s shares have surged 61.7% and outperformed the industry’s 16% gain in the past three months. The industry is currently placed at the top 32% of all the Zacks classified industries. The Zacks Rank #3 (Hold) stock’s solid run on bourses is further justified by a VGM Score of A. Strength in the company’s e-commerce initiatives and Preferred Lease segment has been contributing to its performance.
Let’s Explore
Rent-A-Center put up a stellar first-quarter 2020, wherein the top and the bottom lines beat the Zacks Consensus Estimate and grew year over year. While the company’s earnings marked the second straight beat, sales beat estimates for the third consecutive time. Sturdy performance in the quarter was buoyed by a robust e-commerce performance. The company has been implementing curbside pickup, which has been gaining huge popularity and has now become the effective way to meet customers’ demands in the wake of coronavirus crisis. In fact, the company experienced solid momentum in April, thanks to higher e-commerce sales. It witnessed e-commerce growth of more than 100% in the month as compared to the prior year. This is likely to boost overall sales in the second quarter.
Meanwhile, the company is investing in enhancing its omni-channel platform so that customers can experience a seamless approach across channels, marketsproducts and brands. The company is increasing e-commerce offerings and mobile applications, apart from implementing additional e-commerce functionality to drive performance.
In addition, Rent-A-Center’s Acceptance Now’ business model is gaining traction as it enhances consumers’ shopping experience. Moreover, the buyout of Merchants Preferred, a nationwide virtual rent-to-own provider, enhances the company’s rent-to-own capabilities and allows it to provide both virtual and staffed solutions.
Notably, revenues at Acceptance Now, which is now known as Preferred Lease segment, grew 10% to $216.1 million in the first quarter, driven by higher invoice volumes and contributions from the buyout of Merchants Preferred. Invoice volumes rose 16.9% to $150.5 million.
Adding to such positives, Rent-A-Center expects sequential growth in cash flow for the second quarter of 2020 and strong profit margin for the year. It also expects a favorable trend in lease-to-own as primary and subprime lenders tightened credit measures.
Don’t Miss These Solid Bets
BJs Wholesale Club Holdings (BJ - Free Report) has a long-term earnings growth rate of 13.5% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
HR Block (HRB - Free Report) , also a Zacks Rank #1 stock, has a long-term earnings growth rate of 10%.
Duluth Holdings (DLTH - Free Report) has an average trailing four-quarter positive earnings surprise of 19.3% and a Zacks Rank #2 (Buy).
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.1% per year.
These 7 were selected because of their superior potential for immediate breakout.
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