Aaron’s Outlook Improves As Rent-A-Center Woes Persist

November 7, 2017

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Courtesy of Benzinga.

Aaron's Outlook Improves As Rent-A-Center Woes Persist

Rent-A-Center Receives A Bid From A Familiar Source

With its Progressive financial segment poised for growth, specialty retailer Aaron’s, Inc. (NYSE: AAN) was upgraded Wednesday by Loop Capital. Competitor Rent-A-Center (NASDAQ: RCII) rejected a $693 million buyout offer on Wednesday.

The Analyst

Loop Capital’s Anthony Chukumba.

The Rating:

Chukumba upgraded Aaron’s from Hold to Buy rating, but kept his price target at $42 on the lease-to-own retailer. (See Chukumba’s track record here.)

The Thesis

Aaron’s recent acquisitions of Progressive Financial and SEI are proving to be accretive transactions for the company, according to Loop Capital.

“We continue to be impressed by Progressive’s revenue growth, and think Progressive will benefit from Rent-A-Center’s ongoing travails. We also believe the recent SEI acquisition will drive improved results in the Aaron’s Business division,” Chukumba said.

While shares have been on a recent downtrend following a third-quarter earnings miss in October, the miss was not as bad as it looked, Chukumba said, noting that Aaron’s does not provide quarterly guidance. “We thinks sell-side expectations were simply too optimistic,” he said.