Aaron’s (AAN) Shares Down 6.2% on Disappointing Earnings

Aaron’s, Inc. (NYSE:AAN) shares traded down 6.2% on Thursday following a weaker than expected earnings announcement. The stock traded as low as $39.40 and last traded at $42.34. 3,205,770 shares traded hands during mid-day trading, an increase of 311% from the average session volume of 780,450 shares. The stock had previously closed at $45.13.

The company reported $0.81 earnings per share for the quarter, missing analysts’ consensus estimates of $0.96 by ($0.15). The company had revenue of $954.81 million for the quarter, compared to the consensus estimate of $926.74 million. Aaron’s had a net margin of 8.65% and a return on equity of 11.64%. The business’s revenue was up 13.1% compared to the same quarter last year. During the same quarter in the previous year, the company posted $0.80 earnings per share.

The business also recently announced a quarterly dividend, which was paid on Monday, April 2nd. Stockholders of record on Friday, March 23rd were given a dividend of $0.03 per share. The ex-dividend date of this dividend was Thursday, March 22nd. This represents a $0.12 dividend on an annualized basis and a dividend yield of 0.28%. Aaron’s’s payout ratio is 4.69%.

Aaron’s announced that its board has authorized a share repurchase plan on Thursday, February 15th that authorizes the company to buyback $500.00 million in shares. This buyback authorization authorizes the company to repurchase shares of its stock through open market purchases. Stock buyback plans are often an indication that the company’s board believes its stock is undervalued.

A number of analysts have recently weighed in on the company. Zacks Investment Research downgraded Aaron’s from a “strong-buy” rating to a “hold” rating in a research report on Tuesday, March 20th. Piper Jaffray upped their target price on Aaron’s from $42.00 to $45.00 and gave the company a “hold” rating in a research report on Thursday, February 15th. KeyCorp upped their target price on Aaron’s from $50.00 to $54.00 and gave the company an “overweight” rating in a research report on Friday, February 16th. SunTrust Banks reiterated a “buy” rating on shares of Aaron’s in a research report on Friday, February 16th. Finally, Loop Capital downgraded Aaron’s from a “buy” rating to a “hold” rating and set a $42.00 target price for the company. in a research report on Wednesday, January 24th. Two analysts have rated the stock with a sell rating, three have assigned a hold rating, nine have issued a buy rating and one has given a strong buy rating to the company’s stock. The company has a consensus rating of “Buy” and an average target price of $46.36.

In related news, insider Robert P. Sinclair, Jr. sold 1,000 shares of the company’s stock in a transaction on Tuesday, February 27th. The stock was sold at an average price of $46.00, for a total transaction of $46,000.00. Following the completion of the sale, the insider now directly owns 10,021 shares in the company, valued at approximately $460,966. The sale was disclosed in a filing with the SEC, which is available through this link. Also, Director Robert H. Yanker sold 40,195 shares of the company’s stock in a transaction on Wednesday, March 7th. The stock was sold at an average price of $47.69, for a total value of $1,916,899.55. Following the sale, the director now owns 8,038 shares of the company’s stock, valued at $383,332.22. The disclosure for this sale can be found here. Over the last 90 days, insiders have sold 42,647 shares of company stock valued at $2,033,048. 2.28% of the stock is owned by corporate insiders.

A number of institutional investors have recently bought and sold shares of AAN. Allianz Asset Management GmbH raised its position in Aaron’s by 13.6% in the third quarter. Allianz Asset Management GmbH now owns 31,341 shares of the company’s stock valued at $1,367,000 after purchasing an additional 3,750 shares during the last quarter. California Public Employees Retirement System raised its position in Aaron’s by 11.2% in the third quarter. California Public Employees Retirement System now owns 179,213 shares of the company’s stock valued at $7,819,000 after purchasing an additional 18,113 shares during the last quarter. Parametric Portfolio Associates LLC raised its position in Aaron’s by 9.8% in the third quarter. Parametric Portfolio Associates LLC now owns 286,095 shares of the company’s stock valued at $12,482,000 after purchasing an additional 25,507 shares during the last quarter. Bank of Montreal Can raised its position in Aaron’s by 3.6% in the fourth quarter. Bank of Montreal Can now owns 119,816 shares of the company’s stock valued at $4,773,000 after purchasing an additional 4,161 shares during the last quarter. Finally, Schwab Charles Investment Management Inc. raised its position in Aaron’s by 3.4% in the fourth quarter. Schwab Charles Investment Management Inc. now owns 496,791 shares of the company’s stock valued at $19,798,000 after purchasing an additional 16,354 shares during the last quarter.

The company has a quick ratio of 0.80, a current ratio of 2.73 and a debt-to-equity ratio of 0.21. The stock has a market cap of $3,153.47, a P/E ratio of 16.54 and a beta of 0.05.

About Aaron’s

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.

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