Is Rent-A-Center (RCII) Stock Undervalued Right Now?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to...
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One company value investors might notice is Rent-A-Center (RCII). RCII is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 8.61 right now. For comparison, its industry sports an average P/E of 10.11. Over the last 12 months, RCII's Forward P/E has been as high as 14.94 and as low as 8.44, with a median of 9.89.
Investors should also recognize that RCII has a P/B ratio of 4.74. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 6.83. Within the past 52 weeks, RCII's P/B has been as high as 5.88 and as low as 2.99, with a median of 4.74.
Finally, we should also recognize that RCII has a P/CF ratio of 3.32. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. RCII's current P/CF looks attractive when compared to its industry's average P/CF of 6.24. Over the past 52 weeks, RCII's P/CF has been as high as 4.41 and as low as 1.87, with a median of 3.30.
Value investors will likely look at more than just these metrics, but the above data helps show that Rent-A-Center is likely undervalued currently. And when considering the strength of its earnings outlook, RCII sticks out at as one of the market's strongest value stocks.
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