RCII Earnings: A Streak of Profit Growth Continues, but Falls Short of Estimates

RCII (NASDAQ:RCII) reported its results for the third quarter. Rent-A-Center is an operator in the United States rent-to-own industry.

Earnings season is back and more important than ever. Get our newest CHEAT SHEET stock picks now

RCII Earnings Cheat Sheet

Results: Net income for RCII rose to $39.9 million (67 cents per share) vs. $31.2 million (52 cents per share) in the same quarter a year earlier. This marks a rise of 27.8% from the year-earlier quarter.

Revenue: Rose 5% to $739.3 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: RCII reported adjusted net income of 60 cents per share. By that measure, the company fell short of mean estimate of 71 cents per share. Analysts were expecting revenue of $753.9 million.

Quoting Management: “We are generally pleased with our results in the quarter, as total revenues increased 5% and earnings per diluted share increased approximately 12%,” said Mark E. Speese, the Company’s Chairman and Chief Executive Officer. “The RAC Acceptance segment continued to perform commendably, growing revenue over 60% from a year ago to $84 million, with a gross margin of 59.3% and an operating profit of over $7 million and ending the quarter with 882 stores,” Speese continued. “For the first nine months of the year, each of our business segments has grown their revenue and all segments combined grew 8.4% and, with the exception of our international segment, have contributed to our year-to-date earnings per diluted share of $2.28. As such, we remain optimistic in achieving our 2012 total revenue and earnings per diluted share guidance outlined in our 2011 fourth quarter earnings press release.”

Key Stats:

The company has now seen its net income increase for three consecutive quarters. In the second quarter, net income rose 10.8% and in the first quarter, the figure rose 17.4%.

Revenue has increased for four consecutive quarters. Revenue increased 7.4% to $749.7 million in the second quarter. The figure rose 12.5% in the first quarter from the year earlier and climbed 8.9% in the fourth quarter of the last fiscal year from the year-ago quarter.

After beating analyst estimates for the two previous quarters, the company fell short of forecasts. In the second quarter, it topped the mark by 3 cents, and in the first quarter, it was ahead by 3 cents.

Looking Forward: Expectations for the company’s next-quarter performance are higher than they were ninety days ago. Over the past three months, the average estimate for the fourth quarter has risen to 69 cents per share from 67 cents. For the fiscal year, the average estimate has moved up from $3.12 a share to $3.13 over the last ninety days.

Competitors to Watch: Aaron’s, Inc., McGrath RentCorp, Best Buy Co., Inc., GameStop Corp., RadioShack Corporation, CONN’S, Inc., hhgregg, Inc., and Electro Rent Corporation.

Stocks with improving earnings metrics are worthy of your extra attention. In fact, “E = Earnings Are Increasing Quarter-Over-Quarter” is a core component of our CHEAT SHEET investing framework for this very reason. Don’t waste another minute — click here and get our CHEAT SHEET stock picks now.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)