Time New York: Thu 26 Apr 05:14 am  |  Save 15% on H&R Block Online


Rent-A-Center Stock Gains 9% After Rejecting Buyout Offer


Shares of Rent-A-Center, Inc. RCII gained 8.9% yesterday, following the company’s rejection of a buyout offer by Private equity firm, Vintage Capital. The company in the recent past was offered $15 per share, which was 35% above the Monday’s closing price of $11.10. The value of the deal would have been nearly $800 million.

Rent-A-Center stated that Vintage offer "significantly undervalues the company". The company further added that the strategic initiatives which it has taken will deliver better value to shareholders than the Vintage’s offer.

Management has undertaken initiatives to strengthen the performance of its Core U.S. segment. In an attempt to augment cash flow generation from Core U.S. business, the company is focusing on rates, terms and purchase options that are much more aligned with the customer’s needs. The company is also optimizing product mix, increasing the average ticket price, upgrading workforce, concentrating on lowering delinquency rates and rationalizing existing stores as well as contemplating on new ones.

The company’s new business model called Acceptance Now is also gaining traction. Management is focusing on optimizing strategic retail partnerships in order to enhance service and profitability. Further, it is centralizing account management to tackle operations more effectively and execute risk assessment polices across all locations.

Rent-A-Center is investing in enhancing omni-channel platform so that customers can experience a seamless approach across channels, markets, retailers, products and brands. The company is increasing e-commerce offerings and mobile applications, and leveraging cloud-based point-of-sale platform to manage orders more efficiently, lower losses and cut operating costs.

However, we noted that despite yesterday’s gain, the stock is still down 3.7% in the past one month, underperforming the Zacks categorized Consumer Services – Miscellaneous industry’s increase of 7%. We remained concerned about this Zacks Rank #4 (Sell) company’s top and bottom line performance, which has been declining year-over-year. Moreover, total revenue has also missed the consensus mark for the seventh straight quarter.

Key Picks

Better-ranked stocks worth considering in the retail space include G-III Apparel Group, Ltd. GIII, Tilly's, Inc. TLYS and The Children's Place, Inc. PLCE. All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

G-III Apparel Group has an impressive long-term earnings growth rate of 15%.

Tilly's has long-term earnings growth rate of 13% and also surpassed the Zacks Consensus Estimate in the trailing four quarters, with an average earnings beat of 120.4%.

The Children's Place has reported earnings beat in the trailing four quarters, with an average of 36.6%.

More Stock News: 8 Companies Verge on Apple-Like Run

Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs.

A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

To read this article on Zacks.com click here.
<-- You can share this post with your network,
or give us your opinion and leave a comment.
Be sure to check our RSS feeds for updates.