Shares of Rent-A-Center (NASDAQ:RCII), a lease-to-own provider for products like furniture and appliances, declined significantly in Thursday’s extended trading session. Investors were spooked by the third-quarter guidance cut and the sudden departure of the company’s CFO.
Rent-A-Center stock fell 20.5% in yesterday’s post-market trading. The company lowered its Q3 adjusted earnings per share (EPS) guidance to the range of $0.85 to $0.95, from the prior outlook of $1.05 to $1.25. RCII also reduced the upper end of its Q3 revenue guidance.
It now expects revenue of $1.0 billion to $1.02 billion, compared to the previous outlook of $1.0 billion to $1.055 billion. The revised guidance fell short of analysts’ EPS expectation of $1.16 and revenue estimate of $1.03 billion.
Rent-A-Center’s CEO Mitch Fadel stated that the persistent deterioration in economic conditions has impacted retail traffic and customer payment patterns.
Meanwhile, the company did not update or reaffirm its full-year outlook. Last month, Rent-A-Center lowered its 2022 guidance and stated that it expects revenue in the range of $4.265 billion to $4.385 billion. It guided for 2022 adjusted EPS of $4.00 to $4.50.
Rent-A-Center also announced that Maureen Short, Executive Vice President and CFO, left the company on September 28. Short will be succeeded by Fahmi Karam effective October 31. Karam is currently serving as the CFO of Santander Consumer USA. The company did not provide any specific reason explaining Short’s departure.
Is Rent-A-Center Stock a Buy, Sell, or Hold?
The Street is cautiously optimistic on Rent-A-Center stock, with a Moderate Buy consensus rating based on two Buys and two Holds. The average RCII stock price target of $33.50 implies 50% upside potential from current levels.
