The company rents major consumer electronics, appliances, computers, and furniture, generally to those who can't afford to purchase it right away or lack the credit. Under the agreements, the customer usually purchases the merchandise at the end of the rental period. You can believe it when Rent-A-Center says its customers are facing challenges. Headwinds include high gas and food prices.
Still, its competitor, Aaron Rents
Rent-A-Center has expanded into financial services, and this seems a little aggressive. It's always risky to lend to people with shaky credit, and this may be contributing to its slowdown. CompuCredit
Rent-A-Center says that this struggle will be temporary. However, "temporary" can mean different things to different people; it can be an awfully long time. Rent-A-Center is investing in its business and initiatives to improve things at the store level. As a general concept -- the devil is in the details -- this is good. The company may end up in an even stronger position, taking market share and adding to its leading position. But with Rent-A-Center's trailing P/E of 22, if this is a long cycle, investors may be in for more of the same before things start looking brighter.
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Fool contributor Larry Rothman is happy to receive feedback, and promises to read it when not being wrestled by his three children. He doesn't have any positions in the companies mentioned. The Fool has a disclosure policy.
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