Head-To-Head Review: The Michaels Companies (NASDAQ:MIK) and Rent-A-Center (RCII)
The Michaels Companies (NASDAQ: MIK) and Rent-A-Center (NASDAQ:RCII) are both retail/wholesale companies, but which is the superior stock? We will compare the two businesses based on the strength of their profitabiliy, risk, institutional ownership, valuation, earnings, analyst recommendations and dividends.
This table compares The Michaels Companies and Rent-A-Center’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|The Michaels Companies||7.30%||-22.75%||18.28%|
Risk and Volatility
The Michaels Companies has a beta of 0.96, indicating that its share price is 4% less volatile than the S&P 500. Comparatively, Rent-A-Center has a beta of 0.67, indicating that its share price is 33% less volatile than the S&P 500.
Rent-A-Center pays an annual dividend of $0.32 per share and has a dividend yield of 2.3%. The Michaels Companies does not pay a dividend.
Insider and Institutional Ownership
98.4% of The Michaels Companies shares are held by institutional investors. 1.5% of The Michaels Companies shares are held by company insiders. Comparatively, 3.4% of Rent-A-Center shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
Earnings & Valuation
This table compares The Michaels Companies and Rent-A-Center’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|The Michaels Companies||$5.20 billion||0.73||$800.72 million||$1.87||10.77|
|Rent-A-Center||$2.80 billion||0.26||$104.70 million||N/A||N/A|
The Michaels Companies has higher revenue and earnings than Rent-A-Center.
This is a summary of recent ratings and price targets for The Michaels Companies and Rent-A-Center, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|The Michaels Companies||0||4||7||0||2.64|
The Michaels Companies presently has a consensus price target of $25.43, indicating a potential upside of 26.26%. Rent-A-Center has a consensus price target of $11.00, indicating a potential downside of 19.41%. Given The Michaels Companies’ stronger consensus rating and higher possible upside, analysts plainly believe The Michaels Companies is more favorable than Rent-A-Center.
The Michaels Companies beats Rent-A-Center on 11 of the 14 factors compared between the two stocks.
About The Michaels Companies
The Michaels Companies, Inc. (Michaels) is an arts and crafts specialty retailer in North America. The Company’s segments include Michaels-U.S., Michaels-Canada, Aaron Brothers, Pat Catan’s and Darice. As of January 28, 2017, the Company operated 1,223 Michaels retail stores in 49 states and Canada, with approximately 18,000 average square feet of selling space per store. It operated 109 Aaron Brothers stores in nine states, with approximately 5,500 average square feet of selling space and 35 Pat Catan’s stores in five states, with approximately 32,000 average square feet of selling space, as of January 28, 2017. The Company also operates an international wholesale business under the Darice brand name. The Company’s stores purchase custom frames, framing supplies and mats from its framing operation and subsidiary, Artistree, Inc. (Artistree), which consists of a manufacturing facility and four regional processing centers.
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.
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