Rent-A-Center (NASDAQ: RCII) and Sally Beauty Holdings (NYSE:SBH) are both consumer discretionary companies, but which is the better stock? We will compare the two businesses based on the strength of their profitabiliy, analyst recommendations, dividends, valuation, risk, institutional ownership and earnings.

Analyst Recommendations

This is a summary of current recommendations and price targets for Rent-A-Center and Sally Beauty Holdings, 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
Sally Beauty Holdings 1 7 3 0 2.18

Rent-A-Center currently has a consensus price target of $11.00, indicating a potential downside of 18.15%. Sally Beauty Holdings has a consensus price target of $25.00, indicating a potential upside of 18.54%. Given Sally Beauty Holdings’ higher probable upside, analysts plainly believe Sally Beauty Holdings is more favorable than Rent-A-Center.

Volatility & Risk

Rent-A-Center has a beta of 0.67, suggesting that its stock price is 33% less volatile than the S&P 500. Comparatively, Sally Beauty Holdings has a beta of 0.65, suggesting that its stock price is 35% less volatile than the S&P 500.

Dividends

Rent-A-Center pays an annual dividend of $0.32 per share and has a dividend yield of 2.4%. Sally Beauty Holdings does not pay a dividend.

Profitability

This table compares Rent-A-Center and Sally Beauty Holdings’ 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%
Sally Beauty Holdings 5.89% -80.60% 11.83%

Valuation & Earnings

This table compares Rent-A-Center and Sally Beauty Holdings’ 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 0.26 $104.70 million N/A N/A
Sally Beauty Holdings $3.94 billion 0.74 $597.29 million $1.64 12.86

Sally Beauty Holdings has higher revenue and earnings than Rent-A-Center.

Summary

Sally Beauty Holdings beats Rent-A-Center on 8 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.

Sally Beauty Holdings Company Profile

Sally Beauty Holdings, Inc. is an international specialty retailer and distributor of professional beauty supplies with operations primarily in North America, South America and Europe. The Company operates through two business segments: Sally Beauty Supply and Beauty Systems Group (BSG). Sally Beauty Supply is a domestic and international chain of cash and carry retail stores, which offers professional beauty supplies to both salon professionals and retail customers primarily in North America, Puerto Rico, and parts of Europe and South America. BSG, including its franchise-based business Armstrong McCall, is a full service beauty supply distributor, which offers professional brands of beauty products directly to salons and salon professionals through its own sales force and professional-only stores (including franchise stores) in partially exclusive geographical territories in North America and parts of Europe.

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