Critical Comparison: Aaron’s (AAN) and Its Rivals

Aaron’s (NYSE: AAN) is one of 16 public companies in the “Equipment rental & leasing, not elsewhere classified” industry, but how does it weigh in compared to its rivals? We will compare Aaron’s to similar companies based on the strength of its valuation, dividends, risk, profitability, earnings, analyst recommendations and institutional ownership.

Valuation & Earnings

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This table compares Aaron’s and its rivals gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Net Income Price/Earnings Ratio
Aaron’s $3.38 billion $292.53 million 18.84
Aaron’s Competitors $1.49 billion $248.94 million -0.64

Aaron’s has higher revenue and earnings than its rivals. Aaron’s is trading at a higher price-to-earnings ratio than its rivals, indicating that it is currently more expensive than other companies in its industry.

Profitability

This table compares Aaron’s and its rivals’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Aaron’s 8.65% 11.64% 7.06%
Aaron’s Competitors 4.17% 3.45% -0.56%

Dividends

Aaron’s pays an annual dividend of $0.12 per share and has a dividend yield of 0.2%. Aaron’s pays out 4.7% of its earnings in the form of a dividend. As a group, “Equipment rental & leasing, not elsewhere classified” companies pay a dividend yield of 2.3% and pay out 34.1% of their earnings in the form of a dividend. Aaron’s has increased its dividend for 11 consecutive years.

Institutional and Insider Ownership

58.4% of shares of all “Equipment rental & leasing, not elsewhere classified” companies are owned by institutional investors. 2.3% of Aaron’s shares are owned by insiders. Comparatively, 14.1% of shares of all “Equipment rental & leasing, not elsewhere classified” companies are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Aaron’s and its rivals, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Aaron’s 1 3 7 1 2.67
Aaron’s Competitors 81 397 633 50 2.56

Aaron’s currently has a consensus price target of $46.50, indicating a potential downside of 3.57%. As a group, “Equipment rental & leasing, not elsewhere classified” companies have a potential upside of 15.76%. Given Aaron’s’ rivals higher probable upside, analysts clearly believe Aaron’s has less favorable growth aspects than its rivals.

Volatility & Risk

Aaron’s has a beta of 0.05, suggesting that its share price is 95% less volatile than the S&P 500. Comparatively, Aaron’s’ rivals have a beta of 1.86, suggesting that their average share price is 86% more volatile than the S&P 500.

Summary

Aaron’s beats its rivals on 10 of the 15 factors compared.

Aaron’s Company Profile

Aaron's, Inc. operates as an omnichannel provider of lease-purchase solutions. It operates through three segments: Progressive Leasing, Aaron's Business, and DAMI. The company engages in the sale, lease ownership, and specialty retailing of furniture, consumer electronics, home appliances, and accessories. As of February 15, 2018, it operated approximately 1,726 company-operated and franchised stores in 47 states and Canada, as well as its e-commerce platform, Aarons.com. Aaron's, Inc. was founded in 1955 and is headquartered in Atlanta, Georgia.

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