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Rent-A-Center (RCII) Q2 Earnings: What Awaits the Stock?

Rent-A-Center, Inc. RCII, which recently turned down the buyout offer by private equity firm, Vintage Capital, is slated to release second-quarter 2017 results on Jul 26. The question lingering in the minds of investors is whether this leading rent-to-own store operator will be able to post a positive earnings surprise in the quarter to be reported. Let’s see how things are shaping up prior to this announcement.

What to Expect?

The current Zacks Consensus Estimate for the quarter under review is 8 cents, substantially down from 41 cents reported in the year-ago period. We note that the Zacks Consensus Estimate has remained stable in the past 30 days. Analysts polled by Zacks expect revenues of $665.9 million, down about 11% from the year-ago quarter.

Factors at Play

We remained concerned about the company’s top-line and bottom-line performance which has been declining year over year. Moreover, total revenue has also missed the consensus mark for the seventh straight quarter. Total revenue fell 11.2% year over year during the first quarter, exhibiting decline witnessed across the Core U.S., Mexico and Franchising segments, partially mitigated by growth registered at Acceptance Now segment.

Nevertheless, Rent-A-Center is concentrating on a new labor model, supply chain initiative and productivity enhancements. Management hinted that these endeavors are directed toward improving the performance of Core U.S. segment, optimizing the AcceptanceNOW business, and enhancing distribution channels as well as integrating retail and online offerings. These may have a favorable impact on the quarter to be reported.

What Does the Zacks Model Unveil?

Our proven model does not conclusively show that Rent-A-Center is likely to beat earnings estimates this quarter. A stock needs to have both a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Rent-A-Center has an Earnings ESP of 0.00% as the Most Accurate estimate and the Zacks Consensus Estimate both are pegged at 8 cents. Moreover, the company carries a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Rent-A-Center Inc. Price, Consensus and EPS Surprise

 

Rent-A-Center Inc. Price, Consensus and EPS Surprise | Rent-A-Center Inc. Quote

Stocks with Favorable Combination

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:

L Brands, Inc. LB has an Earnings ESP of +2.38% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Costco Wholesale Corporation COST has an Earnings ESP of +0.50% and a Zacks Rank #3.

Nordstrom, Inc. JWN has an Earnings ESP of + 4.92% and a Zacks Rank #3.

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Rent-A-Center Inc. (RCII): Free Stock Analysis Report
 
Nordstrom, Inc. (JWN): Free Stock Analysis Report
 
L Brands, Inc. (LB): Free Stock Analysis Report
 
Costco Wholesale Corporation (COST): Free Stock Analysis Report
 
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