Will Rent-A-Center (RCII) Stock Benefit From This 'Buy' Rating?

Tickers in this article: RCII

NEW YORK (TheStreet) -- Rent-A-Center  shares received a late boost on Thursday after the company was upgraded to "buy" from "neutral" by analysts at Gilford Securities.

Rent-A-Center shares are up 1.1% to 28.38 in trading today.

The upgrade comes after the company beat Thomson Reuters analysts EPS estimates of 56 cents by 1 cent in its first quarter earnings report on Monday.

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Separately, TheStreet Ratings team rates RENT-A-CENTER INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate RENT-A-CENTER INC (RCII) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • RCII's revenue growth has slightly outpaced the industry average of 6.5%. Since the same quarter one year prior, revenues slightly increased by 1.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The gross profit margin for RENT-A-CENTER INC is currently very high, coming in at 93.65%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 1.69% trails the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Specialty Retail industry. The net income has significantly decreased by 72.5% when compared to the same quarter one year ago, falling from $47.46 million to $13.06 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Specialty Retail industry and the overall market, RENT-A-CENTER INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • You can view the full analysis from the report here: RCII Ratings Report
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