Rent-A-Center Earnings: Here’s Why Shares are Down Now

Rent-A-Center Inc. (NASDAQ:RCII) delivered a profit and beat Wall Street’s expectations, BUT came up short on beating the revenue expectation. The revenue miss is a negative sign to shareholders seeking high growth out of the company. Shares are down 0.08%

Rent-A-Center Inc. Earnings Cheat Sheet

Results: Adjusted Earnings Per Share increased 2.7% to $0.76 in the quarter versus EPS of $0.74 in the year-earlier quarter.

Revenue: Rose 1.44% to $760.5 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Rent-A-Center Inc. reported adjusted EPS income of $0.76 per share. By that measure, the company beat the mean analyst estimate of $0.75. It missed the average revenue estimate of $779.38 million.

Quoting Management: “I am pleased with our progress in building our portfolio of agreements in our Core U.S. business with a continuing period-over-period improvement in demand as measured by our 6.6% increase in deliveries for the quarter. Therefore, we believe our portfolio of agreements will surpass prior year levels in the third quarter and produce positive same store sales growth in the Core U.S. business in the fourth quarter,” said Mark E. Speese, the Company’s Chairman and Chief Executive Officer. “Our growth initiatives continue to perform very well. RAC Acceptance revenues were over $117 million in the quarter, an increase of over 52% and contributed over 15% of our total revenues and approximately 23% of our total operating profit. Mexico grew revenues over 137% and ended the quarter with 130 locations. We believe we will generate positive store level or four-wall monthly operating profit in Mexico by the last month of this year,” Speese continued. “We believe the Core U.S. business will continually improve throughout the balance of the year and our growth initiatives will remain on their productive path. We are also incorporating the benefit of our 4.6 million share repurchase as part of the accelerated stock buyback (ASB) program and, as a result, raising our 2013 diluted earnings per share range to $3.03 to $3.15,” Speese concluded.

Key Stats (on next page)…

Revenue decreased 7.17% from $819.28 million in the previous quarter. EPS decreased 5% from $0.80 in the previous quarter.

Looking Forward: Analysts have a more negative outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has fallen from a profit of $0.73 to a profit $0.69. For the current year, the average estimate has moved down from a profit of $3.31 to a profit of $3.08 over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Email any earnings discrepancies to earnings [at] wallstcheatsheet.com)