Rent-A-Center Shares Dropped: What You Need to Know (RCII)

Rent-A-Center Shares Dropped: What You Need to Know

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Rent-A-Center (Nasdaq: RCII ) shares are in freefall today -- one of the biggest losers on the Street -- and I'll bet you can guess why. It is, after all, earnings season. And when a stock takes a 12% tumble during earnings season, chances are the reason it's falling is because it missed earnings. And Rent-A-Center missed big-time.

So what: The question is how big? Analysts say they were looking for $0.85 per share this quarter, and Rent-A-Center says it earned $0.79 -- which doesn't sound too bad. Then again, RAC's number was of the pro forma variety; under GAAP accounting standards, the company was forced to admit it only earned $0.69.

Now what: Interestingly, RAC rival Aaron's (NYSE: AAN ) also reported earnings yesterday, but with opposite results, beating estimates handily with a $0.55-per-share profit -- up 20% year over year. As Aaron's CEO Robert Loudermilk stated at the time, "The numbers speak for themselves." I agree. And what the numbers are saying is that Aaron's is beating the pants off Rent-A-Center.

This being the case, if you're looking at Rent-A-Center today, and thinking the stock looks attractive at 11.6 times earnings, with 11.8% growth in the future ... think again. This stock may not be as cheap as it looks.

Think Rent-A-Center is one to own? Add it to your watchlist and find out.

The Steve Jobs Betrayal
You may already know that in the final year of his life, Jobs revealed a stunning betrayal — and told his biographer, "I will spend my last dying breath... and every penny of Apple's $40 billion in the bank to right this wrong." What was it that made Jobs so irate — and why could it make a few in-the-know investors some major profits over the coming months and years?

Enter your email address below to find out what made Jobs so enraged!

Fool contributor Rich Smith does not own (or short) Rent-A-Center. The Motley Fool has a disclosure policy. Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment icon found on every comment.