RCII Earnings: Streak of Four Straight Profit Declines Snapped

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

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RCII Earnings Cheat Sheet for the Fourth Quarter

Results: Net income for the rental and leasing services company rose to $49.3 million (83 cents per share) vs. $31.9 million (49 cents per share) in the same quarter a year earlier. This marks a rise of 54.8% from the year earlier quarter.

Revenue: Rose 8.9% to $737.5 million from the year earlier quarter.

Actual vs. Wall St. Expectations: RCII reported adjusted net income of 85 cents per share. By that measure, the company beat the mean estimate of 82 cents per share. Analysts were expecting revenue of $741.1 million.

Quoting Management: “We are generally pleased with our earnings for the fourth quarter and our overall results for the fiscal year 2011,” said Mark E. Speese, the Company’s Chairman and Chief Executive Officer. “While our top line was somewhat tempered a bit due to our core rent-to-own customers remaining focused on value, our customer demand remained strong.”

Key Stats:

Last quarter’s profit increase breaks a streak of four consecutive quarters of year-over-year profit drops. In the third quarter, net income fell 22.9% from the year earlier, while the figure fell 16.6% in the second quarter, 14.1% in the first quarter and 27.1% in the fourth quarter of the last fiscal year.

Revenue has risen the past four quarters. Revenue increased 6% to $704.3 million in the third quarter. The figure rose 4% in the second quarter from the year earlier and climbed 3.3% in the first quarter from the year-ago quarter.

The company has now beaten estimates the last two quarters. In the third quarter, it topped expectations with net income of 60 cents versus a mean estimate of net income of 58 cents per share.

Looking Forward: Over the past ninety days, the average estimate for the first quarter of the next fiscal year has fallen from 93 cents per share to 88 cents, indicating that analysts are growing pessisimistic about the company’s performance next quarter. Over the past three months, the average estimate for the fiscal year has climbed from $2.87 per to share to $2.89.

Competitors to Watch: Aaron’s, Inc. (NYSE:AAN), McGrath RentCorp (NASDAQ:MGRC), Best Buy Co., Inc. (NYSE:BBY), GameStop Corp. (NYSE:GME), RadioShack Corporation (NYSE:RSH), CONN’S, Inc. (NASDAQ:CONN), hhgregg, Inc. (NYSE:HGG), and Electro Rent Corporation (NASDAQ:ELRC).

Stock Performance: Shares of RCII were down 0.5% from the previous close.

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

To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com