Intrinsic value of Rent-A-Center - RCII

Previous Close

$12.37

  Intrinsic Value

$0.99

stock screener

  Rating & Target

str. sell

-92%

  Value-price divergence*

-19%

Previous close

$12.37

 
Intrinsic value

$0.99

 
Up/down potential

-92%

 
Rating

str. sell

 
Value-price divergence*

-19%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of RCII stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 0.7

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -9.61
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  2,963
  3,022
  3,092
  3,171
  3,260
  3,359
  3,468
  3,586
  3,714
  3,851
  3,999
  4,157
  4,326
  4,506
  4,697
  4,899
  5,114
  5,341
  5,582
  5,835
  6,104
  6,387
  6,685
  6,999
  7,331
  7,680
  8,047
  8,434
  8,841
  9,269
  9,719
Variable operating expenses, $m
 
  3,950
  4,041
  4,144
  4,261
  4,390
  4,531
  4,686
  4,852
  5,032
  5,225
  5,426
  5,646
  5,881
  6,130
  6,394
  6,674
  6,971
  7,285
  7,616
  7,966
  8,335
  8,725
  9,135
  9,568
  10,023
  10,503
  11,008
  11,539
  12,098
  12,685
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  3,030
  3,950
  4,041
  4,144
  4,261
  4,390
  4,531
  4,686
  4,852
  5,032
  5,225
  5,426
  5,646
  5,881
  6,130
  6,394
  6,674
  6,971
  7,285
  7,616
  7,966
  8,335
  8,725
  9,135
  9,568
  10,023
  10,503
  11,008
  11,539
  12,098
  12,685
Operating income, $m
  -67
  -928
  -949
  -973
  -1,000
  -1,031
  -1,064
  -1,100
  -1,139
  -1,181
  -1,226
  -1,269
  -1,320
  -1,375
  -1,433
  -1,495
  -1,560
  -1,630
  -1,703
  -1,781
  -1,862
  -1,949
  -2,040
  -2,136
  -2,237
  -2,343
  -2,456
  -2,574
  -2,698
  -2,828
  -2,966
EBITDA, $m
  669
  -888
  -909
  -932
  -958
  -987
  -1,019
  -1,054
  -1,092
  -1,132
  -1,176
  -1,222
  -1,272
  -1,324
  -1,381
  -1,440
  -1,503
  -1,570
  -1,641
  -1,715
  -1,794
  -1,877
  -1,965
  -2,057
  -2,155
  -2,257
  -2,365
  -2,479
  -2,599
  -2,725
  -2,857
Interest expense (income), $m
  44
  38
  39
  41
  43
  45
  47
  49
  52
  55
  59
  62
  66
  70
  74
  78
  83
  88
  93
  99
  105
  111
  118
  125
  132
  140
  148
  157
  166
  176
  186
Earnings before tax, $m
  -113
  -965
  -988
  -1,014
  -1,043
  -1,075
  -1,111
  -1,149
  -1,191
  -1,236
  -1,284
  -1,331
  -1,386
  -1,445
  -1,507
  -1,573
  -1,644
  -1,718
  -1,797
  -1,880
  -1,968
  -2,060
  -2,158
  -2,261
  -2,369
  -2,484
  -2,604
  -2,731
  -2,864
  -3,004
  -3,152
Tax expense, $m
  -8
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -105
  -965
  -988
  -1,014
  -1,043
  -1,075
  -1,111
  -1,149
  -1,191
  -1,236
  -1,284
  -1,331
  -1,386
  -1,445
  -1,507
  -1,573
  -1,644
  -1,718
  -1,797
  -1,880
  -1,968
  -2,060
  -2,158
  -2,261
  -2,369
  -2,484
  -2,604
  -2,731
  -2,864
  -3,004
  -3,152

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  95
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  1,603
  1,549
  1,585
  1,625
  1,671
  1,722
  1,777
  1,838
  1,903
  1,974
  2,050
  2,131
  2,217
  2,309
  2,407
  2,511
  2,621
  2,738
  2,861
  2,991
  3,128
  3,273
  3,426
  3,588
  3,757
  3,936
  4,125
  4,323
  4,531
  4,751
  4,982
Adjusted assets (=assets-cash), $m
  1,508
  1,549
  1,585
  1,625
  1,671
  1,722
  1,777
  1,838
  1,903
  1,974
  2,050
  2,131
  2,217
  2,309
  2,407
  2,511
  2,621
  2,738
  2,861
  2,991
  3,128
  3,273
  3,426
  3,588
  3,757
  3,936
  4,125
  4,323
  4,531
  4,751
  4,982
Revenue / Adjusted assets
  1.965
  1.951
  1.951
  1.951
  1.951
  1.951
  1.952
  1.951
  1.952
  1.951
  1.951
  1.951
  1.951
  1.951
  1.951
  1.951
  1.951
  1.951
  1.951
  1.951
  1.951
  1.951
  1.951
  1.951
  1.951
  1.951
  1.951
  1.951
  1.951
  1.951
  1.951
Average production assets, $m
  331
  338
  346
  355
  365
  376
  388
  402
  416
  431
  448
  466
  485
  505
  526
  549
  573
  598
  625
  654
  684
  715
  749
  784
  821
  860
  901
  945
  990
  1,038
  1,089
Working capital, $m
  0
  -97
  -99
  -101
  -104
  -107
  -111
  -115
  -119
  -123
  -128
  -133
  -138
  -144
  -150
  -157
  -164
  -171
  -179
  -187
  -195
  -204
  -214
  -224
  -235
  -246
  -258
  -270
  -283
  -297
  -311
Total debt, $m
  724
  751
  782
  818
  858
  903
  952
  1,005
  1,063
  1,125
  1,192
  1,263
  1,339
  1,421
  1,507
  1,598
  1,695
  1,798
  1,906
  2,021
  2,142
  2,270
  2,405
  2,547
  2,696
  2,854
  3,020
  3,194
  3,378
  3,572
  3,775
Total liabilities, $m
  1,338
  1,365
  1,396
  1,432
  1,472
  1,517
  1,566
  1,619
  1,677
  1,739
  1,806
  1,877
  1,953
  2,035
  2,121
  2,212
  2,309
  2,412
  2,520
  2,635
  2,756
  2,884
  3,019
  3,161
  3,310
  3,468
  3,634
  3,808
  3,992
  4,186
  4,389
Total equity, $m
  265
  184
  189
  193
  199
  205
  212
  219
  227
  235
  244
  254
  264
  275
  286
  299
  312
  326
  340
  356
  372
  390
  408
  427
  447
  468
  491
  514
  539
  565
  593
Total liabilities and equity, $m
  1,603
  1,549
  1,585
  1,625
  1,671
  1,722
  1,778
  1,838
  1,904
  1,974
  2,050
  2,131
  2,217
  2,310
  2,407
  2,511
  2,621
  2,738
  2,860
  2,991
  3,128
  3,274
  3,427
  3,588
  3,757
  3,936
  4,125
  4,322
  4,531
  4,751
  4,982
Debt-to-equity ratio
  2.732
  4.070
  4.150
  4.230
  4.320
  4.410
  4.500
  4.600
  4.690
  4.790
  4.890
  4.980
  5.080
  5.170
  5.260
  5.350
  5.430
  5.520
  5.600
  5.680
  5.750
  5.830
  5.900
  5.970
  6.030
  6.090
  6.150
  6.210
  6.260
  6.320
  6.370
Adjusted equity ratio
  0.113
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -105
  -965
  -988
  -1,014
  -1,043
  -1,075
  -1,111
  -1,149
  -1,191
  -1,236
  -1,284
  -1,331
  -1,386
  -1,445
  -1,507
  -1,573
  -1,644
  -1,718
  -1,797
  -1,880
  -1,968
  -2,060
  -2,158
  -2,261
  -2,369
  -2,484
  -2,604
  -2,731
  -2,864
  -3,004
  -3,152
Depreciation, amort., depletion, $m
  736
  39
  40
  41
  42
  43
  44
  46
  47
  49
  50
  47
  48
  50
  53
  55
  57
  60
  63
  65
  68
  72
  75
  78
  82
  86
  90
  94
  99
  104
  109
Funds from operations, $m
  -73
  -926
  -948
  -973
  -1,001
  -1,032
  -1,066
  -1,104
  -1,144
  -1,187
  -1,234
  -1,284
  -1,337
  -1,394
  -1,454
  -1,518
  -1,586
  -1,658
  -1,734
  -1,814
  -1,899
  -1,989
  -2,083
  -2,182
  -2,287
  -2,398
  -2,514
  -2,636
  -2,765
  -2,900
  -3,043
Change in working capital, $m
  -427
  -2
  -2
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
Cash from operations, $m
  354
  -924
  -946
  -970
  -998
  -1,029
  -1,063
  -1,100
  -1,140
  -1,183
  -1,229
  -1,279
  -1,332
  -1,388
  -1,448
  -1,512
  -1,579
  -1,651
  -1,726
  -1,806
  -1,891
  -1,980
  -2,073
  -2,172
  -2,277
  -2,386
  -2,502
  -2,624
  -2,752
  -2,887
  -3,028
Maintenance CAPEX, $m
  0
  -33
  -34
  -35
  -36
  -37
  -38
  -39
  -40
  -42
  -43
  -45
  -47
  -48
  -50
  -53
  -55
  -57
  -60
  -63
  -65
  -68
  -72
  -75
  -78
  -82
  -86
  -90
  -94
  -99
  -104
New CAPEX, $m
  -61
  -8
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -17
  -18
  -19
  -20
  -21
  -23
  -24
  -25
  -27
  -28
  -30
  -32
  -33
  -35
  -37
  -39
  -41
  -43
  -46
  -48
  -50
Cash from investing activities, $m
  -59
  -41
  -42
  -44
  -46
  -48
  -50
  -52
  -54
  -57
  -60
  -63
  -66
  -68
  -71
  -76
  -79
  -82
  -87
  -91
  -95
  -100
  -105
  -110
  -115
  -121
  -127
  -133
  -140
  -147
  -154
Free cash flow, $m
  295
  -965
  -987
  -1,014
  -1,044
  -1,076
  -1,113
  -1,152
  -1,194
  -1,240
  -1,289
  -1,341
  -1,397
  -1,457
  -1,520
  -1,587
  -1,658
  -1,734
  -1,813
  -1,897
  -1,986
  -2,080
  -2,178
  -2,283
  -2,392
  -2,508
  -2,629
  -2,757
  -2,892
  -3,034
  -3,183
Issuance/(repayment) of debt, $m
  -234
  27
  31
  36
  40
  45
  49
  53
  58
  62
  67
  71
  76
  81
  86
  91
  97
  103
  109
  115
  121
  128
  135
  142
  150
  158
  166
  175
  184
  193
  203
Issuance/(repurchase) of shares, $m
  0
  969
  992
  1,019
  1,048
  1,081
  1,117
  1,156
  1,199
  1,244
  1,293
  1,340
  1,396
  1,456
  1,519
  1,586
  1,657
  1,732
  1,811
  1,895
  1,984
  2,077
  2,176
  2,280
  2,390
  2,505
  2,626
  2,754
  2,889
  3,030
  3,179
Cash from financing (excl. dividends), $m  
  -233
  996
  1,023
  1,055
  1,088
  1,126
  1,166
  1,209
  1,257
  1,306
  1,360
  1,411
  1,472
  1,537
  1,605
  1,677
  1,754
  1,835
  1,920
  2,010
  2,105
  2,205
  2,311
  2,422
  2,540
  2,663
  2,792
  2,929
  3,073
  3,223
  3,382
Total cash flow (excl. dividends), $m
  61
  30
  36
  41
  45
  49
  54
  58
  62
  67
  71
  70
  75
  80
  85
  90
  95
  101
  107
  113
  119
  126
  132
  140
  147
  155
  163
  172
  181
  190
  200
Retained Cash Flow (-), $m
  119
  -969
  -992
  -1,019
  -1,048
  -1,081
  -1,117
  -1,156
  -1,199
  -1,244
  -1,293
  -1,340
  -1,396
  -1,456
  -1,519
  -1,586
  -1,657
  -1,732
  -1,811
  -1,895
  -1,984
  -2,077
  -2,176
  -2,280
  -2,390
  -2,505
  -2,626
  -2,754
  -2,889
  -3,030
  -3,179
Prev. year cash balance distribution, $m
 
  84
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  -854
  -956
  -978
  -1,003
  -1,032
  -1,064
  -1,098
  -1,137
  -1,178
  -1,222
  -1,270
  -1,321
  -1,376
  -1,434
  -1,496
  -1,561
  -1,631
  -1,705
  -1,783
  -1,865
  -1,952
  -2,044
  -2,140
  -2,243
  -2,350
  -2,463
  -2,583
  -2,708
  -2,840
  -2,979
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  -819
  -875
  -851
  -826
  -800
  -772
  -742
  -710
  -677
  -641
  -603
  -564
  -523
  -481
  -439
  -397
  -355
  -314
  -274
  -237
  -202
  -170
  -140
  -114
  -91
  -72
  -55
  -42
  -31
  -22
Current shareholders' claim on cash, %
  100
  31.6
  9.9
  3.1
  1.0
  0.3
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Rent-A-Center, Inc., together with its subsidiaries, leases household durable goods to customers on a rent-to-own basis. The company operates through four segments: Core U.S., Acceptance Now, Mexico, and Franchising. It offers durable products, such as consumer electronics; appliances; computers, including tablets; smartphones; and furniture, including accessories under rental purchase agreements. The company also provides merchandise on an installment sales basis; and offers the rent-to-own transaction to consumers who do not qualify for financing from the traditional retailer through kiosks within retailer’s locations. It operates retail installment sales stores under the Get It Now and Home Choice names; and rent-to-own and franchised rent-to-own stores under the Rent-A-Centre, ColorTyme, and RimTyme names. As of December 31, 2015, the company owned and operated approximately 2,672 stores in the United States, Canada, and Puerto Rico, including 45 retail installment sales stores; 1,444 Acceptance Now kiosk locations in 40 states and Puerto Rico; 532 Acceptance Now direct locations; and 143 stores in Mexico, as well as franchised 227 rent-to-own stores in 31 states under the Rent-A-Center, ColorTyme, and RimTyme names. Rent-A-Center, Inc. was founded in 1986 and is headquartered in Plano, Texas.

FINANCIAL RATIOS  of  Rent-A-Center (RCII)

Valuation Ratios
P/E Ratio -6.3
Price to Sales 0.2
Price to Book 2.5
Price to Tangible Book
Price to Cash Flow 1.9
Price to Free Cash Flow 2.2
Growth Rates
Sales Growth Rate -9.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -24.7%
Cap. Spend. - 3 Yr. Gr. Rate -10.8%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 273.2%
Total Debt to Equity 273.2%
Interest Coverage -2
Management Effectiveness
Return On Assets -3.6%
Ret/ On Assets - 3 Yr. Avg. -11.4%
Return On Total Capital -9%
Ret/ On T. Cap. - 3 Yr. Avg. -18.5%
Return On Equity -32.4%
Return On Equity - 3 Yr. Avg. -44.3%
Asset Turnover 1.7
Profitability Ratios
Gross Margin 65.3%
Gross Margin - 3 Yr. Avg. 66.4%
EBITDA Margin 22.5%
EBITDA Margin - 3 Yr. Avg. 15.5%
Operating Margin -2.3%
Oper. Margin - 3 Yr. Avg. -9%
Pre-Tax Margin -3.8%
Pre-Tax Margin - 3 Yr. Avg. -10.5%
Net Profit Margin -3.5%
Net Profit Margin - 3 Yr. Avg. -9.9%
Effective Tax Rate 7.1%
Eff/ Tax Rate - 3 Yr. Avg. 16.4%
Payout Ratio -24.8%

RCII stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the RCII stock intrinsic value calculation we used $2963 million for the last fiscal year's total revenue generated by Rent-A-Center. The default revenue input number comes from 2016 income statement of Rent-A-Center. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our RCII stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for RCII is calculated based on our internal credit rating of Rent-A-Center, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Rent-A-Center.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of RCII stock the variable cost ratio is equal to 130.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for RCII stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.2% for Rent-A-Center.

Corporate tax rate of 27% is the nominal tax rate for Rent-A-Center. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the RCII stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for RCII are equal to 11.2%.

Life of production assets of 10 years is the average useful life of capital assets used in Rent-A-Center operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for RCII is equal to -3.2%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $265 million for Rent-A-Center - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 52.967 million for Rent-A-Center is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Rent-A-Center at the current share price and the inputted number of shares is $0.7 billion.

RELATED COMPANIES Price Int.Val. Rating
AAN Aaron's In 39.70 40.22  hold
CONN Conn's 22.15 10.21  sell
BBY Best Buy 54.80 66.60  buy

COMPANY NEWS

▶ After-hours buzz: GOOGL, APC, SANM & more   [Jul-24-17 05:37PM  CNBC]
▶ Rent-A-Center, Inc. Reports June Key Operating Metrics   [Jul-18-17 09:00AM  Business Wire]
▶ Sale in retail stocks? 4 trades   [05:00PM  CNBC Videos]
▶ [$$] Rent-A-Center Rejects Takeover Proposal; Stock Jumps   [04:45PM  The Wall Street Journal]
▶ Story Stocks from Briefing.com   [11:14AM  Briefing.com]
▶ Rent-A-Center Rejects Go-Private Offer   [10:57AM  Barrons.com]
▶ [$$] Activist Engaged Capital Moves to Overhaul Hain Celestial Board   [Jun-29-17 07:02PM  The Wall Street Journal]
▶ The Market In 5 Minutes   [Jun-20-17 09:00AM  Benzinga]
▶ Can activists revamp Rent-A-Center   [Jun-15-17 06:53PM  CNBC Videos]
▶ Rent-A-Center, Inc. Declares Cash Dividend   [Jun-07-17 06:45PM  Business Wire]
▶ Rent-A-Center, Inc. Announces Amended Credit Facility   [Jun-06-17 04:13PM  Business Wire]
▶ Rent-A-Center Raises $114,000 for North Texas Food Bank   [Jun-02-17 11:04AM  Business Wire]
▶ Rent-A-Center Comments on Glass Lewis Report   [Jun-01-17 01:15PM  Business Wire]
▶ Rent-A-Center Comments on ISS Report   [May-29-17 08:30AM  Business Wire]
▶ Rent-A-Center, Inc. Reports April Key Operating Metrics   [May-15-17 09:01AM  Business Wire]
▶ ETFs with exposure to Rent-A-Center, Inc. : May 11, 2017   [May-11-17 05:24PM  Capital Cube]
▶ Why Rent-A-Center, Inc. Stock Jumped 20% Last Month   [May-08-17 10:00AM  Motley Fool]
▶ Rent-A-Center reports 1Q loss   [May-01-17 07:16PM  Associated Press]
▶ Rent-A-Center Ditches Suit for Hunger   [Apr-28-17 04:16PM  Business Wire]
▶ Rent-A-Center, Inc. Reports March Key Operating Metrics   [Apr-20-17 09:30AM  Business Wire]
▶ Rent-A-Center Buyers Face Trump, Antitrust Hurdles   [Apr-15-17 11:20AM  TheStreet.com]
▶ Rent-A-Center Stock Up on Raymond James' 'Strong Buy'   [Apr-12-17 11:20AM  TheStreet.com]
▶ Rent-A-Center appoints CEO, announces growth plan   [02:55PM  American City Business Journals]
▶ 6 Stocks That Could Get a Bump From Glenn Welling   [Apr-05-17 08:15PM  TheStreet.com]
▶ Why Wendy's, Rent-A-Center, and Corning Slumped Today   [Mar-31-17 05:11PM  Motley Fool]
Stock chart of RCII Financial statements of RCII Annual reports of RCII
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2017. All rigths reserved.