Rent-A-Center (NASDAQ: RCII) and Cabela’s (NYSE:CAB) are both consumer discretionary companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, analyst recommendations, institutional ownership, risk, profitability, earnings and valuation.
This table compares Rent-A-Center and Cabela’s’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Rent-A-Center pays an annual dividend of $0.32 per share and has a dividend yield of 2.6%. Cabela’s does not pay a dividend.
Volatility and Risk
Rent-A-Center has a beta of 0.67, suggesting that its share price is 33% less volatile than the S&P 500. Comparatively, Cabela’s has a beta of 0.14, suggesting that its share price is 86% less volatile than the S&P 500.
Earnings and Valuation
This table compares Rent-A-Center and Cabela’s’ top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Rent-A-Center||$2.80 billion||0.24||$104.70 million||N/A||N/A|
|Cabela’s||$4.06 billion||0.89||$463.18 million||$1.94||27.01|
Cabela’s has higher revenue and earnings than Rent-A-Center.
This is a breakdown of recent ratings and price targets for Rent-A-Center and Cabela’s, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Rent-A-Center currently has a consensus price target of $11.00, indicating a potential downside of 12.00%. Cabela’s has a consensus price target of $64.60, indicating a potential upside of 23.31%. Given Cabela’s’ higher possible upside, analysts clearly believe Cabela’s is more favorable than Rent-A-Center.
Insider and Institutional Ownership
55.6% of Cabela’s shares are held by institutional investors. 3.4% of Rent-A-Center shares are held by company insiders. Comparatively, 21.0% of Cabela’s shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.
Cabela’s beats Rent-A-Center on 10 of the 15 factors compared between the two stocks.
Rent-A-Center, Inc. is a rent-to-own operator in North America. The Company provides an opportunity to obtain ownership of products, such as consumer electronics, appliances, computers (including tablets), smartphones and furniture (including accessories), under rental purchase agreements. The Company operates in four segments: Core U.S., Acceptance Now, Mexico, and Franchising. As of December 31, 2016, the Company operated over 2,463 Company-owned stores in the United States, Canada and Puerto Rico. The Company’s Mexico segment consists of the Company-owned rent-to-own stores in Mexico. As of December 31, 2016, the Company operated 130 stores in this segment. Its Franchising segment engages in the sale of rental merchandise to its franchisees. As of December 31, 2016, the Company’s Franchising segment franchised 229 stores in 31 states operating under the Rent-A-Center (152 stores), ColorTyme (39 stores) and RimTyme (38 stores) names.
Cabela’s Incorporated is an omni-channel retailer of hunting, fishing, camping, shooting sports and related outdoor merchandise. The Company offers its customers a selection of national and regional brand products, including its Cabela’s brand. The Company’s segments include Merchandising and Financial Services. The Merchandising segment sells products and services through the Company’s retail stores, its e-commerce Websites (Cabelas.com and Cabelas.ca), and its catalogs. The United States merchandising and Canada merchandising operating segments have been aggregated into its Merchandising segment. The Financial Services segment issues co-branded credit cards, which are available through all of its channels. The Company’s product assortment includes merchandise and equipment for hunting, fishing, marine use, camping, and recreational sport shooting, along with casual and outdoor apparel and footwear, optics, vehicle accessories, and gifts and home furnishings with an outdoor theme.
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