West Marine (NASDAQ: WMAR) and Rent-A-Center (NASDAQ:RCII) are both small-cap consumer discretionary companies, but which is the better investment? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, earnings, dividends, profitability, risk and valuation.
West Marine pays an annual dividend of $0.20 per share and has a dividend yield of 1.5%. Rent-A-Center pays an annual dividend of $0.32 per share and has a dividend yield of 2.6%. West Marine pays out 64.5% of its earnings in the form of a dividend. Rent-A-Center pays out -10.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Rent-A-Center is clearly the better dividend stock, given its higher yield and lower payout ratio.
Risk & Volatility
West Marine has a beta of 1.31, meaning that its stock price is 31% more volatile than the S&P 500. Comparatively, Rent-A-Center has a beta of 0.68, meaning that its stock price is 32% less volatile than the S&P 500.
This is a breakdown of current ratings and target prices for West Marine and Rent-A-Center, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
West Marine currently has a consensus price target of $10.49, indicating a potential downside of 19.13%. Rent-A-Center has a consensus price target of $11.50, indicating a potential downside of 8.29%. Given Rent-A-Center’s stronger consensus rating and higher possible upside, analysts plainly believe Rent-A-Center is more favorable than West Marine.
Valuation and Earnings
This table compares West Marine and Rent-A-Center’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|West Marine||$697.67 million||0.47||$39.13 million||$0.31||41.82|
|Rent-A-Center||$2.80 billion||0.24||$104.70 million||($2.94)||-4.27|
Rent-A-Center has higher revenue and earnings than West Marine. Rent-A-Center is trading at a lower price-to-earnings ratio than West Marine, indicating that it is currently the more affordable of the two stocks.
Insider & Institutional Ownership
57.9% of West Marine shares are held by institutional investors. 27.5% of West Marine shares are held by insiders. Comparatively, 3.4% of Rent-A-Center shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
This table compares West Marine and Rent-A-Center’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Rent-A-Center beats West Marine on 9 of the 16 factors compared between the two stocks.
West Marine Company Profile
West Marine, Inc. is a waterlife outfitter for cruisers, sailors, anglers and paddlesports enthusiasts. The Company offers a selection of core boating and water recreation products, primarily serving the needs of boat owners and professionals providing services to them. It services its customers through physical stores and two e-commerce Websites. It is a specialty retailer of boating supplies, gear, apparel, footwear and other waterlife-related products. It operates approximately 260 stores located in approximately 40 states, Puerto Rico and Canada. Its products include boating products and merchandise expansion products. Its boating products include maintenance, electronics, sailboat hardware, anchors/docking/moorings, engine systems, boats/outboards, ventilation, navigation, trailering, seating/boat covers and barbecues/appliances. Its merchandise expansion products include clothing accessories, fishing, watersports, paddlesports, coolers and waterlife lifestyle accessories.
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.
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