Rent-A-Center Stock Could Be a Stable Long-Term Investment

RCII still has upside potential after its bullish run over the past year

facebook twitter linkedin


Rent-A-Center, Inc. (NASDAQ:RCII) is an American public furniture and electronics rent-to-own company based in Plano, Texas. RCII provides lease-to-own options on products such as furniture, appliances, consumer electronics, and computers in approximately 1,970 Rent-A-Center stores in the United States, Mexico, and Puerto Rico. Recently, employees at Rent-A-Center joined forces for their annual Spring for Kids campaign, a fundraiser supporting family and youth empowerment efforts.

Rent-A-Center stock has more than doubled in price year-over-year from when the shares hit a 52-week low of $25.74 in July 2020. Additionally, shares of RCII have grown by 35% year-to-date, but are currently trading down 23% from its record high of $66.70 in early June. Rent-A-Center stock also has a forward dividend of $1.24 and a dividend yield of 2.42%.

rcii160ma

Additionally, Rent-A-Center has beat earnings expectations on all four of its most earnings reports. For Q2 of 2020, RCII beat analyst estimates by a margin of $0.20 and reported an EPS of $0.80. For Q3 of 2020, Rent-A-Center's EPS increased to $1.04 and beat expectations by a margin of $0.02. For Q4 of 2020, RCII posted a decrease in earnings, dropping to $1.03 per share but still beating estimates by a margin of $0.01. For Q1 of 2021, Rent-A-Center reported an EPS of $1.32 and beat expectations by a margin of $0.20.

From a fundamental perspective, Rent-A-Center stock looks like a solid value investment. Rent-A-Center stock trades at a price-earnings ratio of 14.88 and has an extremely attractive forward price-earnings ratio of 9.67. The biggest fundamental issue with potentially buying Rent-A-Center stock lies in the company's balance sheet, which holds $123 million in cash and $1.63 billion in debt.

Lastly, RCII sports affordably priced premiums at the moment. The security's Schaeffer's Volatility Index (SVI) of 43% stands in the low 13th percentile of readings in its annual range. This means options players are now pricing in low volatility expectations for the equity. 

Celebrate 40 Years of Schaeffer's With 4 FREE Stock Picks!


 




 
Special Offers from Schaeffer's Trading Partners