Rent-A-Center (NASDAQ: RCII) and Party City Holdco (NYSE:PRTY) are both small-cap consumer discretionary companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, valuation, earnings, profitability, analyst recommendations, risk and institutional ownership.
Valuation and Earnings
This table compares Rent-A-Center and Party City Holdco’s gross 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||0.24||$104.70 million||($2.94)||-4.27|
|Party City Holdco||$2.33 billion||0.71||$364.88 million||$0.96||14.38|
Party City Holdco has higher revenue, but lower earnings than Rent-A-Center. Rent-A-Center is trading at a lower price-to-earnings ratio than Party City Holdco, indicating that it is currently the more affordable of the two stocks.
Rent-A-Center pays an annual dividend of $0.32 per share and has a dividend yield of 2.6%. Party City Holdco does not pay a dividend. Rent-A-Center pays out -10.9% of its earnings in the form of a dividend.
This table compares Rent-A-Center and Party City Holdco’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Party City Holdco||4.97%||13.97%||4.09%|
This is a summary of recent ratings and price targets for Rent-A-Center and Party City Holdco, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Party City Holdco||0||2||2||0||2.50|
Rent-A-Center currently has a consensus price target of $11.50, indicating a potential downside of 8.29%. Party City Holdco has a consensus price target of $17.33, indicating a potential upside of 25.60%. Given Party City Holdco’s stronger consensus rating and higher possible upside, analysts clearly believe Party City Holdco is more favorable than Rent-A-Center.
Risk & Volatility
Rent-A-Center has a beta of 0.68, indicating that its share price is 32% less volatile than the S&P 500. Comparatively, Party City Holdco has a beta of 2.69, indicating that its share price is 169% more volatile than the S&P 500.
Party City Holdco beats Rent-A-Center on 9 of the 13 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.
Party City Holdco Company Profile
Party City Holdco Inc. is a holding company with no operating assets or operations. As of December 31, 2016, the Company owned PC Nextco Holdings, LLC (PC Nextco), which owned PC Intermediate Holdings, Inc. (PC Intermediate). As of December 31, 2016, PC Intermediate owned Party City Holdings Inc. (PCHI). PCHI or its direct or indirect subsidiaries conduct all of its operating businesses. The Company operates through two segments: Retail and Wholesale. Its retail operations generate revenue primarily through the sale of its Amscan, Designware, Anagram and Costumes USA party supplies through its Party City stores, Halloween City stores and PartyCity.com. Its wholesale revenues are generated from the sale of party goods for all occasions, including paper and plastic tableware, accessories and novelties, costumes, metallic and latex balloons and stationery.
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