Rent-A-Center (RCII) versus Tractor Supply (TSCO) Financial Contrast
Rent-A-Center (NASDAQ: RCII) and Tractor Supply (NASDAQ:TSCO) are both consumer discretionary companies, but which is the superior stock? We will contrast the two businesses based on the strength of their earnings, dividends, institutional ownership, risk, profitability, analyst recommendations and valuation.
Institutional & Insider Ownership
92.2% of Tractor Supply shares are held by institutional investors. 3.4% of Rent-A-Center shares are held by insiders. Comparatively, 1.2% of Tractor Supply shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
This table compares Rent-A-Center and Tractor Supply’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Rent-A-Center||$2.80 billion||0.19||$104.70 million||($2.94)||-3.43|
|Tractor Supply||$7.04 billion||1.09||$849.82 million||$3.37||17.95|
Tractor Supply has higher revenue and earnings than Rent-A-Center. Rent-A-Center is trading at a lower price-to-earnings ratio than Tractor Supply, indicating that it is currently the more affordable of the two stocks.
This is a summary of current recommendations and price targets for Rent-A-Center and Tractor Supply, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Rent-A-Center currently has a consensus price target of $11.50, indicating a potential upside of 14.09%. Tractor Supply has a consensus price target of $68.72, indicating a potential upside of 13.59%. Given Rent-A-Center’s higher possible upside, research analysts clearly believe Rent-A-Center is more favorable than Tractor Supply.
Rent-A-Center pays an annual dividend of $0.32 per share and has a dividend yield of 3.2%. Tractor Supply pays an annual dividend of $1.08 per share and has a dividend yield of 1.8%. Rent-A-Center pays out -10.9% of its earnings in the form of a dividend. Tractor Supply pays out 32.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Rent-A-Center is clearly the better dividend stock, given its higher yield and lower payout ratio.
This table compares Rent-A-Center and Tractor Supply’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Volatility & 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, Tractor Supply has a beta of 1.3, suggesting that its share price is 30% more volatile than the S&P 500.
Tractor Supply beats Rent-A-Center on 11 of the 15 factors compared between the two stocks.
Rent-A-Center Company Profile
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.
Tractor Supply Company Profile
Tractor Supply Company is an operator of rural lifestyle retail stores in the United States. The Company is focused on supplying the needs of recreational farmers and ranchers and others, as well as tradesmen and small businesses. It is engaged in the retail sale of products that support the rural lifestyle. The Company operates retail stores under the names Tractor Supply Company, Del’s Feed & Farm Supply and Petsense, and operates Websites under the names TractorSupply.com and Petsense.com. The Company’s selection of merchandise consists of various product categories, including equine, livestock, pet and small animal products; hardware, truck, towing and tool products; seasonal products, including heating, lawn and garden items, power equipment, gifts and toys; work/recreational clothing and footwear, and maintenance products for agricultural and rural use. Its brands include 4health, JobSmart, Bit & Bridle, Paws & Claws, Blue Mountain, Redstone, Dumor, Equistages and Royal Wing.
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