Rent-A-Center (NASDAQ: RCII) and Barnes & Noble Education (NYSE:BNED) are both small-cap consumer discretionary companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, valuation, analyst recommendations, dividends, risk, institutional ownership and earnings.

Valuation & Earnings

This table compares Rent-A-Center and Barnes & Noble Education’s top-line 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 0.25 $104.70 million N/A N/A
Barnes & Noble Education $1.87 billion 0.17 $78.29 million $0.11 61.01

Rent-A-Center has higher revenue and earnings than Barnes & Noble Education.

Volatility & Risk

Rent-A-Center has a beta of 0.67, meaning that its stock price is 33% less volatile than the S&P 500. Comparatively, Barnes & Noble Education has a beta of 0.88, meaning that its stock price is 12% less volatile than the S&P 500.

Profitability

This table compares Rent-A-Center and Barnes & Noble Education’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%
Barnes & Noble Education 0.29% 1.15% 0.58%

Analyst Ratings

This is a breakdown of current recommendations and price targets for Rent-A-Center and Barnes & Noble Education, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Rent-A-Center 2 3 2 1 2.25
Barnes & Noble Education 0 0 1 0 3.00

Rent-A-Center currently has a consensus target price of $11.00, indicating a potential downside of 15.12%. Barnes & Noble Education has a consensus target price of $14.00, indicating a potential upside of 108.64%. Given Barnes & Noble Education’s stronger consensus rating and higher possible upside, analysts plainly believe Barnes & Noble Education is more favorable than Rent-A-Center.

Insider & Institutional Ownership

68.9% of Barnes & Noble Education shares are owned by institutional investors. 3.4% of Rent-A-Center shares are owned by company insiders. Comparatively, 2.4% of Barnes & Noble Education shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Dividends

Rent-A-Center pays an annual dividend of $0.32 per share and has a dividend yield of 2.5%. Barnes & Noble Education does not pay a dividend.

Summary

Barnes & Noble Education beats Rent-A-Center on 8 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.

Barnes & Noble Education Company Profile

Barnes & Noble Education, Inc. is a contract operator of bookstores on college and university campuses across the United States and a provider of digital education services. The Company offers a support system, and a retail and digital learning experience for students. Through its subsidiary, Barnes & Noble College Booksellers, LLC, the Company operates approximately 750 campus bookstores and the school-branded e-commerce sites for each store, serving over five million college students and their faculty. The Company offers a set of products and services to help students, faculty and administrators achieve their shared educational and social goals. Its suite of product offerings includes Textbook and Course Material Sales, Textbook and Course Material Rentals, General Merchandise, Trade, Digital Education and Brand Partnerships. The Company also offers other merchandise, such as laptops and other technology products, notebooks, backpacks, school and dormitory supplies and related items.

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