Earnings Preview: Rent-A-Center

| About: Rent-A-Center Inc. (RCII)

Rent-A-Center (NASDAQ:RCII) is expected to report Q3 earnings after market close Monday, Oct. 27, with a conference call scheduled for Tuesday at 10:45 am.


Analysts are looking for a profit of 48c on revenue of $700.15M. The consensus range is 45c to 50c for EPS, and revenue of $688.6M to $710.68M, according to First Call. In July, the company forecast Q3 revenue of $700M to $715M, and FY08 revenue $2.89B to $2.92B vs. First Call consensus of $2.9B.

Analyst Views

Because of the faltering economy shoppers remain unnerved and have cut back spending on discretionary items. This may have proved to be a positive for Rent-A-Center, as consumers who cannot afford to buy may be looking for rental-to-own alternatives. In a September 15 note Cowen analyst Laura Champine said that the current macro and credit conditions may force consumers into the rent-to-own industry and away from traditional retail. Champine believes that Rent-A-Center's large store base and industry experience give it a "sustainable competitive advantage".

The largest rent-to-own operator in the U.S. recently announced a $34M agreement with Verizon (NYSE:VZ), under which Verizon will modernize the company's North American network.