Rent-A-Center Inc. Earnings Cheat Sheet: Keeping the Profitability Streak Alive

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

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Rent-A-Center Earnings Cheat Sheet for the Third Quarter

Results: Net income for Rent-A-Center Inc. fell to $31.2 million (52 cents per share) vs. $40.5 million (62 cents per share) a year earlier. This is a decline of 22.9% from the year earlier quarter.

Revenue: Rose 6% to $704.3 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 beat the mean estimate of 58 cents per share. Analysts were expecting revenue of $697.5 million.

Quoting Management: “Our results for the quarter were excellent in this very challenging economy as the demand for our products and services remained strong,” said Mark E. Speese, the Company’s Chairman and Chief Executive Officer. “Both our core rent-to-own and RAC Acceptance businesses reflected this customer demand in the quarter with the company’s 2.0% same store sales growth split evenly between the two businesses,” Speese added. “In 2012, we will continue to execute on our strategic plan that we communicated in November 2010. We will continue to focus on keeping the core business strong and extending our reach both domestically and internationally with a compelling set of growth initiatives,” Speese continued. “Accordingly, our 2012 guidance includes total revenue growth in the range of 8% to 11% and net earnings per diluted share growth in the range of 8% to 15%, including approximately $0.20 per share dilution related to our international growth initiatives. We believe our growth will continue to be supported with our significant cash flow from operations and a solid balance sheet,” Speese concluded.

Key Stats:

The company has now seen net income fall in each of the last four quarters. In the second quarter, net income fell 16.6% while the figure fell 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 4% to $698.3 million in the second quarter. The figure rose 3.3% in the first quarter from the year earlier and climbed 0.6% in the fourth quarter of the last fiscal year from the year-ago quarter.

The company beat estimates last quarter after falling short in the previous two quarters. In the second quarter, it missed the mark by 4 cents, and in the first quarter, it fell short by 6 cents.

Looking Forward: For next quarter, analysts have a more positive outlook about the company’s expected results. The average estimate for the fourth quarter is 82 cents per share, up from 80 cents ninety days ago. At $2.87 per share, the average estimate for the fiscal year has fallen from $2.98 ninety days ago.

Competitors to Watch: Aaron’s, Inc. (NYSE:AAN), AeroCentury Corp. (AMEX:ACY), 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).

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(Source: Xignite Financials)