Summary
RCII has been through a huge transformation.
In addition, a merger agreement was in place until recently.
With the merger terminated, RCII is a buy.
The terminated merger creates opportunity
Rent-A-Center (RCII) has experienced tremendous volatility in the past couple of years. The stock has hit just $7 twice during that time frame, while it trades at $16 today, having bounced around a bunch in between in the interim. In addition, the company had a buyout offer from Vintage Capital, which was recently terminated, and shares have been unpredictable in the weeks since. RCII is in the midst of a transformation effort to improve its results, and I think it is a buy on a pullback.
Enormous progress continues to be made
The company's Q3 earnings report was terrific in a variety of ways, underlying the strength that has come from the company's transformation efforts. Total revenue was essentially flat, but that was due to fewer company-operated stores year over year as part of its store base rationalization program. Comparable sales, on the other hand, were up 5.7%, marking the seventh consecutive quarter of same store sales improvement.
