Rent-A-Center (RCII) Stock Up On Q4 Earnings & Revenue Beat
Zacks Investment Research | Feb 26, 2019 06:39AM ET
Shares of Rent-A-Center, Inc. (NASDAQ:RCII) rallied roughly 5% during after-market trading on Feb 25 following better-than-expected results for fourth-quarter 2018. Notably, the top and the bottom line improved year over year. Moreover, it marked the third straight quarter of positive sales and earnings surprise.
This rent-to-own operator delivered adjusted earnings of 35 cents a share that beat the Zacks Consensus Estimate of 19 cents and also compared favorably with a loss of 41 cents in the year-ago quarter. Total revenues of $661.8 million were ahead of the consensus mark of $654.5 million.
The top line grew 3.6% on account of solid comparable-store sales (comps) growth, partly offset by the closure of certain Core U.S. locations. Meanwhile, adjusted EBITDA during the quarter came in at $49 million, far better than a loss of $8.5 million a year ago.
Clearly, the company’s initiatives are well on track. Management intends to focus on cost containment endeavors, improving traffic trends, targeted value proposition, refranchising program and augmenting cash flow. Further, the company is rationalizing store base and lowering debt load. The company informed that its cost-saving initiatives are likely to help lower costs by approximately $50 million in 2019.
Comparable-Store Sales Performance
Comps during the quarter grew 9.1%, reflecting an increase of 8.8%, 9.6% and 13.8% across the Core U.S., Acceptance Now and Mexico segments, respectively. This was the eighth straight quarter of comps improvement.
Notably, comps for the Core U.S., Mexico and Acceptance Now segments have improved 360, 100 and 290 basis points (bps), respectively, on a sequential basis.
Consolidated comps for this Zacks Rank #3 (Hold) company portray a sequential improvement of 340 bps. You can see Zacks Investment Research
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