Rent-A-Center Inc. (NASDAQ: RCII)
Rent-A-Center Inc. (RCII), a company that leases household durable goods to customers on a rent to own basis, yesterday after market reported mixed fourth quarter and year end 2015 financial results. Rent-A-Center reported fourth quarter earnings per share of $0.54 which was better than analyst expectations of $.50. Rent-A-Center reported revenues decreased by 0.4% to $793.8 million which fell short of analyst expectations of $806.33 million.
Rent-A-Center Inc. CEO’s Comments
“Earnings per share for the fourth quarter and the full year 2015, excluding special items, were higher year over year,” stated Mr. Robert D. Davis, Chief Executive Officer of Rent-A-Center, Inc. “Same store sales and profitability trends in our Core business improved in 2015. We delivered double digit same store sales and unit growth in our Acceptance Now business, and Acceptance Now gross margins improved sequentially in Q4, demonstrating our focus on profitable growth. There continue to be additional opportunities to unlock further growth in the business and we are committed to improving operational execution and driving toward higher performance.”
“Our results are not where we want them to be, however, the Rent-A-Center team has made significant progress on a number of fronts. We are now two years into our multi-year transformation and we are making the necessary changes to improve our profitability to drive the long-term success of Rent-A-Center. Our goals continue to be delivering improved profitability in our Core rent-to-own business, maximizing the Acceptance Now revenue growth and profit opportunity, and optimizing our Mexico business,” Mr. Davis concluded. Business Wire
RCII Technical Analysis
RCII opened trading on Monday at $13.50 and closed the day at $13.28 down $0.22, or equivalent to 2%. In after hours with the release of earnings number RCII tanked down to $11.70, equivalent to 12%. Taking a look at the daily chart we can see that RCII has now sunk below its previous 52 week low price of $11.81. Taking a closer look at the daily chart we can see that RCII has been on overall decline dating back to December 1st when it traded at $36.32. RCII has a float of 51.68 million shares and traded over 2 times the normal daily trading volume on Monday. For trading purposes, I would be looking to short RCII off the opening bell on Tuesday. I would give myself a $0.20 stop loss from entry price.
Rent-A-Center, Inc., together with its subsidiaries, leases household durable goods to customers on a rent-to-own basis. The company operates in four segments: Core U.S., Acceptance Now, Mexico, and Franchising. It offers durable products, such as consumer electronics, appliances, computers, furniture, and accessories under rental purchase agreements. The company also provides merchandise on an installment sales basis; and offers the rent-to-own transaction to consumers who do not qualify for financing from the traditional retailer through kiosks within retailers locations. It operates retail installment sales stores under the Get It Now and Home Choice names; and rent-to-own and franchised rent-to-own stores under the Rent-A-Centre names. As of February 26, 2015, the company owned and operated approximately 3,170 stores in the United States, Mexico, Canada, and Puerto Rico; and approximately 1,355 Acceptance Now kiosk locations in the United States and Puerto Rico, as well as franchised approximately 180 rent-to-own stores under the Rent-A-Center, ColorTyme, and RimTyme trade names. Rent-A-Center, Inc. was founded in 1986 and is headquartered in Plano, Texas. Yahoo Finance