Rent-A-Center (NASDAQ: RCII) and Container Store (The) (NYSE:TCS) are both small-cap consumer discretionary companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, dividends, profitability, earnings, risk and valuation.

Profitability

This table compares Rent-A-Center and Container Store (The)’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Rent-A-Center -5.57% -43.47% -8.79%
Container Store (The) 1.13% 5.34% 1.49%

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Rent-A-Center and Container Store (The), as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Rent-A-Center 2 3 2 1 2.25
Container Store (The) 1 3 1 0 2.00

Rent-A-Center presently has a consensus price target of $11.00, suggesting a potential downside of 12.00%. Container Store (The) has a consensus price target of $5.56, suggesting a potential upside of 29.06%. Given Container Store (The)’s higher possible upside, analysts plainly believe Container Store (The) is more favorable than Rent-A-Center.

Insider & Institutional Ownership

78.9% of Container Store (The) shares are held by institutional investors. 3.4% of Rent-A-Center shares are held by company insiders. Comparatively, 65.7% of Container Store (The) shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Volatility & Risk

Rent-A-Center has a beta of 0.67, meaning that its share price is 33% less volatile than the S&P 500. Comparatively, Container Store (The) has a beta of 1.57, meaning that its share price is 57% more volatile than the S&P 500.

Earnings and Valuation

This table compares Rent-A-Center and Container Store (The)’s gross 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
Container Store (The) $825.55 million 0.25 $70.50 million $0.19 22.69

Rent-A-Center has higher revenue and earnings than Container Store (The).

Dividends

Rent-A-Center pays an annual dividend of $0.32 per share and has a dividend yield of 2.6%. Container Store (The) does not pay a dividend.

Summary

Container Store (The) beats Rent-A-Center on 8 of the 14 factors compared between the two stocks.

About Rent-A-Center

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.

About Container Store (The)

The Container Store Group, Inc. is a specialty retailer of storage and organization products. The Company’s segments include The Container Store (TCS), Elfa and Corporate/Other. The Company’s TCS segment consists of its retail stores, Website and call center, as well as its installation and organizational services business. The Company’s Elfa segment includes the manufacturing business that produces the elfa brand products that are sold domestically, exclusively through the TCS segment, as well as throughout Europe. Its Swedish subsidiary, Elfa International AB (Elfa), designs and manufactures component-based shelving and drawer systems and made-to-measure sliding doors. It merchandises over 11,000 products in each of its stores and online. Its stores are organized into various lifestyle departments, which include Bath, Box, Closets, Collections, Containers, Custom Closets, Food Storage, Gift Packaging, Hooks, Kitchen, Laundry, Office, Shelving, Storage, Trash and Travel.

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