Analyzing AerCap (AER) and RentCenter (RCII)


AerCap (NYSE: AER) and Rent-A-Center (NASDAQ:RCII) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, dividends, institutional ownership, earnings, risk, analyst recommendations and valuation.

Institutional and Insider Ownership

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84.5% of AerCap shares are held by institutional investors. 3.4% of Rent-A-Center shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares AerCap and Rent-A-Center’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
AerCap $5.04 billion 1.62 $1.08 billion $6.33 8.16
Rent-A-Center $2.70 billion 0.20 $6.65 million ($0.54) -18.94

AerCap has higher revenue and earnings than Rent-A-Center. Rent-A-Center is trading at a lower price-to-earnings ratio than AerCap, indicating that it is currently the more affordable of the two stocks.

Dividends

Rent-A-Center pays an annual dividend of $0.08 per share and has a dividend yield of 0.8%. AerCap does not pay a dividend. Rent-A-Center pays out -14.8% of its earnings in the form of a dividend.

Analyst Recommendations

This is a summary of current ratings and target prices for AerCap and Rent-A-Center, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AerCap 1 2 8 0 2.64
Rent-A-Center 1 4 0 0 1.80

AerCap currently has a consensus target price of $59.50, suggesting a potential upside of 15.13%. Rent-A-Center has a consensus target price of $8.25, suggesting a potential downside of 19.35%. Given AerCap’s stronger consensus rating and higher probable upside, equities analysts clearly believe AerCap is more favorable than Rent-A-Center.

Profitability

This table compares AerCap and Rent-A-Center’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
AerCap 21.36% 12.31% 2.56%
Rent-A-Center 0.25% -11.30% -1.97%

Volatility and Risk

AerCap has a beta of 1.81, meaning that its stock price is 81% more volatile than the S&P 500. Comparatively, Rent-A-Center has a beta of 0.74, meaning that its stock price is 26% less volatile than the S&P 500.

Summary

AerCap beats Rent-A-Center on 13 of the 16 factors compared between the two stocks.

About AerCap

AerCap Holdings N.V., an aircraft leasing company, engages in the lease, financing, sale, and management of commercial aircraft and engines in Mainland China, Hong Kong, Macau, the United States, Ireland, and internationally. The company provides aircraft asset management services, including remarketing aircraft; collecting rental and maintenance rent payments, monitoring aircraft maintenance, monitoring and enforcing contract compliance, and accepting delivery and redelivery of aircraft; and conducting ongoing lessee financial performance reviews. Its aircraft asset management services also comprise periodically inspecting the leased aircraft; coordinating technical modifications to aircraft to meet new lessee requirements; conducting restructuring negotiations in connection with lease defaults; repossessing aircraft; arranging and monitoring insurance coverage; registering and de-registering aircraft; arranging for aircraft and aircraft engine valuations; and providing market research services. In addition, the company offers cash management services, including treasury services, such as the financing, refinancing, hedging, and ongoing cash management of vehicles; and administrative services comprising accounting and secretarial services consisting of the preparation of budgets and financial statements, and liaising with the rating agencies. Further, it provides engine leasing; certified aircraft engines, airframes, and engine parts; and supply chain solutions. Additionally, the company sells airframe parts to airlines, maintenance, and repair and maintenance service providers, as well as aircraft parts distributors. As of December 31, 2017, it owned and managed a fleet of 1,531 aircraft. AerCap Holdings N.V. was founded in 1995 and is headquartered in Dublin, Ireland.


About Rent-A-Center

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, 2017, the company owned and operated approximately 2,381 stores in the United States, Canada, and Puerto Rico, including 45 retail installment sales stores; 1,106 Acceptance Now staffed locations in 42 states and Puerto Rico; 125 Acceptance Now Direct locations; and 131 stores in Mexico, as well as franchised 225 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.