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: Shares of rent-to-own retailer Rent-A-Center (NASDAQ:RCII) plummeted 19% today after its quarterly results disappointed Wall Street.
So what: The stock has plunged over the past six months on signs of rapidly slowing growth, and today's fourth-quarter results -- in which income plunged 72% on a revenue increase of just 2% -- only reinforce that negative trend. In fact, same-store sales during the quarter fell 1.1% over the year-ago period, suggesting that Rent-A-Center's competitive position continues to weaken as well.
Now what: Management now expects 2014 EBITDA of $325 million to $345 million on revenue growth of 4.5% to 7.5%. "We continue to face meaningful headwinds in our domestic U.S. rent-to-own business, including a customer under severe economic pressure and an intensified promotional environment," cautioned Chairman and CEO Mark Speese in a prepared statement. So while contrarians might be attracted to Rent-A-Center's beaten-down stock, there's likely plenty of room to fall given the revenue, cost, and competitive challenges that management continues to face.
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Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.