As predictable as an installment payment, but as oft-read as the fine print on an interest rate disclosure, the Q4 and full-year earnings release from rent-to-own merchandiser Rent-A-Center (NASDAQ:RCII) will be released Monday after market close. Here's what you need to know to make sense of the market's reaction.

Wall Street Wisdom:

  • General consensus. Eight analysts currently follow Rent-A-Center. Of those, five rate the stock a "hold" and three say it's a "buy."
  • Revenues. Consensus estimates call for the company to report a 2% decline in revenue for the fourth quarter, down to $575.2 million.
  • Earnings. The earnings drop is expected to be more significant, with analysts predicting a 20% slide to $0.44 per share.

Margin watch:
Ordinarily, I'd use this space to provide you with a single table showing Rent-A-Center's trailing-12-month margin performance over the past 18 months, in order to help clarify trends in the company's profitability. Unfortunately, our financial data provider is on the blink today, so I'll give here just the data that seems unaffected:

Margins

3/05

6/05

9/05

Gross

16.5%

16.4%

12.4%

Op.

13.0%

12.6%

7.7%

Net

7.9%

7.2%

2.0%


For comparison, this is how the margins looked in the equivalent year-ago periods:

Margins

3/04

6/04

9/04

Gross

19.4%

19.7%

16.3%

Op.

15.8%

15.7%

12.5%

Net

8.9%

8.9%

1.0%
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects the company's quarterly performance.

Foolish forensics:
The numbers above show you that Rent-A-Center had a tough time in 2005. Margins generally declined across the board, resulting in a 40% loss of market capitalization before the stock finally rebounded in October (when, as you can see, the net margin began edging back northwards in comparison to the previous year).

Foolish lookout:
On Monday, we'll see if September 2005's uptick was just a blip, or the beginning of something longer-term. Back then, Rent-A-Center suggested that its restructuring phase -- in which it closed underperforming stores and took charges to earnings in hopes of improving future profits -- was drawing to a close. The company was expecting to open new stores in Q4, which should make sales begin to rise again -- and, one hopes, profits as well. Tune in Monday to see how the story is playing out.

Rent-A-Center is a Motley Fool Inside Value pick. To find more of the best stocks in Wall Street's bargain bin, sign up today for a free 30-day trial subscription.

Fool contributor Rich Smith does not own shares of Rent-A-Center.