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Can Rent-A-Center (RCII) Keep Earnings Streak Alive in Q1?

Rent-A-Center, Inc. RCII is slated to release first-quarter 2016 results on Apr 27. The big question facing investors is, whether this leading rent-to-own store operator will be able to deliver a positive earnings surprise in the quarter to be reported. In the preceding four quarters, the company outperformed the Zacks Consensus Estimate by an average of 4.1%. Let’s see how things are shaping up for this announcement.

Zacks Model Shows Unlikely Earnings Beat

Our proven model does not conclusively show that Rent-A-Center is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. Rent-A-Center has an Earnings ESP of 0.00% as the Most Accurate estimate and the Zacks Consensus Estimate are both pegged at 40 cents. Rent-A-Center’s Zacks Rank #2 (Buy) increases the predictive power of ESP. However, the company’s ESP of 0.00% makes surprise prediction difficult.

Factors Influencing this Quarter

Rent-A-Center’s new labor model, supply chain initiatives and value-based pricing strategy may have a favorable impact on the quarter to be reported. The company’s business model, Acceptance Now, is also gaining traction as it enhances consumers’ shopping experience.

Rent-A-Center continued with its positive earnings surprise streak and registered year-over-year growth in earnings per share when it reported fourth-quarter 2015 results. However, total revenue declined year over year and came in below analysts’ expectations for the second quarter in a row. The decrease in the top line is attributable to a decline witnessed across the Core U.S. and Mexico segments. As a result, analysts remain a little wary about the company’s top-line performance.

Stocks Poised to Beat Earnings Estimates

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Newell Brands Inc. NWL has an Earnings ESP of +2.63% and a Zacks Rank #1 (Strong Buy).

Church & Dwight Co. Inc. CHD has an Earnings ESP of +1.19% and a Zacks Rank #2.

Kellogg Company K has an Earnings ESP of +1.08% and a Zacks Rank #2.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
NEWELL BRANDS (NWL): Free Stock Analysis Report
 
RENT-A-CENTER (RCII): Free Stock Analysis Report
 
KELLOGG CO (K): Free Stock Analysis Report
 
CHURCH & DWIGHT (CHD): Free Stock Analysis Report
 
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