Upbound Group's Q2 Earnings Drive Stock Price Upward, Analysts Predict Continued Growth

KeyBanc's Bradley Thomas raised their price target on Upbound Group (NASDAQ: UPBD) by 8.3% from $36 to $39 on 2023/08/04. The analyst maintained their Strong Buy rating on the stock.

According to Thomas, Upbound Group's Q2 2023 earnings exceeded expectations, driven by continued improvements in skip/stolen loss rates and better-than-expected Gross Merchandise Volume (GMV) from the company's Acima Leasing segment. Thomas also predicted further year-over-year improvements in Rent-A-Center segment skip/stolen losses for FY 2023 and sequential improvements in Acima's GMV.

For Q2 2023, Upbound Group reported earnings per share (EPS) of $1.11, surpassing the Zacks Consensus Estimate of $0.72. However, this figure fell short of Q2 2022's EPS of $1.15 by 3.5%. The company's revenue for Q2 2023 was $979.16 million, beating the Zacks Consensus Estimate by 1.15%. However, it fell short of Q2 2022's revenue of $1.07 billion by 8.5%.

Looking ahead, Upbound Group's management provided guidance for Q3 2023 and FY 2023. For Q3 2023, the company expects revenue between $0.95 billion and $0.98 billion, with an EPS range of $0.70 to $0.80. For FY 2023, the revised guidance includes revenue of $3.9 billion to $4 billion, up from the prior guidance of $3.8 billion to $4 billion. The EPS guidance also increased to $3.25 to $3.55, up from the previous range of $2.70 to $3.20. Additionally, the company raised its free cash flow guidance to $230 million to $260 million, compared to the previous range of $200 million to $235 million.

CEO Mitch Fadel expressed confidence in the company's ability to manage payment risk in the current environment. Fadel cited the improved lease origination and customer payment trends that contributed to the better-than-expected earnings. He also emphasized Upbound's strong performance in the first half of 2023 and the company's belief in its ability to provide solutions for financially underserved consumers in the face of increasing limitations on financial access and spending for durable goods.

In addition to KeyBanc's Bradley Thomas, other analysts also updated their ratings on Upbound Group on August 4th. Raymond James's Bobby Griffin raised their price target by 17.6% to $34 and maintained their Buy rating on the stock. Stephens & Co.'s Vincent Caintic raised their price target by 11.1% to $36 and maintained their Hold rating on the stock.

The overall sentiment among top-rated analysts is highly positive, with 100% of them rating UPBD as a Strong Buy or Buy. None of the analysts consider it a Hold, and there are no recommendations to sell the stock.

Since Upbound Group's latest quarterly report on August 3rd, the stock price has increased by 3.7%. Year-over-year, the stock has experienced a significant gain of 16.5%, outperforming the S&P 500, which has grown by 8.8% during the same period.

Bradley Thomas, the KeyBanc analyst who raised the price target on Upbound Group, is ranked among the top 3% of Wall Street analysts by WallStreetZen. With an average return of 20.3% and a 60% win rate, Thomas specializes in the Technology and Real Estate sectors, among others.

Upbound Group, Inc. is an omni-channel platform company that leases household durable goods on a lease-to-own basis. It operates in the United States, Puerto Rico, and Mexico, with four segments: Rent-A-Center Business, Acima, Mexico, and Franchising. The company's brands include Rent-A-Center and Acima, which facilitate consumer transactions through various channels. Its product offerings range from furniture and mattresses to consumer electronics, appliances, and accessories. Upbound Group also provides merchandise on an installment sales basis and lease-to-own transactions for consumers who don't qualify for traditional financing. The company operates through retail installment sales stores and franchised lease-to-own stores, as well as an e-commerce platform.

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