Friday - BTIG has initiated coverage on Aaron's (NYSE:AAN) with a Neutral rating, citing challenges from retail industry headwinds on durable goods.
The firm acknowledges the general growth within the Lease To Own sector, driven by increasing consumer demand and a tightening credit supply from alternative capital providers. However, Aaron's, which specializes in lease-to-own retail for furniture, consumer electronics, home appliances, and accessories, faces particular difficulties.
Despite the headwinds, BTIG has a more optimistic view of the virtual lease-to-own segment. The firm believes that virtual businesses in this space have the potential to grow by attracting merchants, even in a declining industry environment. This aspect of the industry could offset some of the challenges faced by brick-and-mortar counterparts like Aaron's.
The coverage initiation by BTIG provides investors with a measured perspective on Aaron's position within the market. While the industry faces shifts and Aaron's navigates through retail headwinds, the company's stock will be one to watch as the market continues to evolve.
In other recent news, Aaron's has been the subject of several significant developments.
TD Cowen has maintained a hold rating on Aaron's shares while increasing the price target to $8.00 from the previous $7.00 following the release of the company's latest financial results. These results revealed a first-quarter earnings per share (EPS) loss of $0.15, falling short of TD Cowen's estimated loss of $0.05 and the consensus loss of $0.07. Despite meeting consensus estimates on lease revenues and fees, Aaron's underperformed in retail sales.
TD Cowen has revised its EPS estimates for Aaron's for the years 2024 and 2025 to $0.25 and $0.84, respectively, suggesting a more optimistic outlook for the company's financial trajectory. The updated price target reflects the potential value TD Cowen sees in Aaron's, factoring in their earnings projections and the intrinsic value of the BrandsMart division.
In other developments, Aaron's first-quarter earnings for 2024 highlighted growth in its e-commerce channel and strong performance from its BrandsMart division. The company reaffirmed its full-year 2024 revenue and EBITDA outlook and raised its non-GAAP diluted EPS projections.
InvestingPro Insights
As Aaron's (NYSE:AAN) navigates the retail headwinds highlighted by BTIG, real-time data from InvestingPro enriches the analysis. With a market capitalization of $259.7 million, Aaron's is trading at a low Price / Book multiple of 0.39 as of Q1 2024, which could indicate a potentially undervalued stock relative to its assets. This is complemented by a high dividend yield of 5.9%, signaling a tangible return to shareholders, especially important for income-focused investors.
InvestingPro Tips reveal that Aaron's has raised its dividend for three consecutive years, demonstrating a commitment to shareholder returns. Additionally, the company's liquid assets exceed short-term obligations, suggesting financial stability in covering immediate liabilities.
Investors may also take note of the strong return over the last month, with a 1-month price total return of 16.48%, and over the last three months, a return of 20.26%. These figures could imply a positive short-term momentum for the stock, which might be of interest to traders looking for quick gains.
For those considering a deeper dive into Aaron's financials and future prospects, InvestingPro provides additional tips. There are 5 more InvestingPro Tips available, offering insights that could help in making a more informed investment decision. To access these valuable tips and metrics, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.