Please ensure Javascript is enabled for purposes of website accessibility

Why Rent-A-Center Jumped 13.1% in January

By Rich Duprey - Feb 7, 2021 at 1:23PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The rent-to-own specialist is undergoing an important transformation.

What happened

Shares of Rent-A-Center (RCII 0.40%) rose 13.1 % in January, according to data provided by S&P Global Market Intelligence, on no specific news, but analysts are becoming more bullish about the rent-to-own specialist as it continues to expand its fintech capabilities.

So what

The growth continues a trend that was evident throughout 2020 as shares rose 33%. However, Rent-A-Center has been on this trajectory for the better part of three years, as CEO Mitch Fadel has returned to reorganize and remake the company into a digital leader in the rent-to-own space.

Rent-A-Center employee and customer looking at papers

Image source: Rent-A-Center.

At the end of December, though, Rent-A-Center announced it was acquiring virtual lease-to-own operator Acima, which should help further cement the business's transformation.

While Fadel has improved the profitability of the physical retail stores, more transactions are occurring online, and the virtual rental arena could be the next big growth opportunity for Rent-A-Center. The Acima acquisition assists in accelerating the development of its fintech platform.

RCII Chart

RCII data by YCharts.

Now what

Rent-A-Center stock is up 78% over the last 12 months and has more than quadrupled in value from the low point hit last March. At 13 times estimated earnings and the free cash flow it produces, the rent-to-own shop could be seen as a discounted growth candidate.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Rent-A-Center, Inc. Stock Quote
Rent-A-Center, Inc.
$27.71 (0.40%) $0.11

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.