Contrasting Air Lease (AL) & Rent-A-Center (RCII)

Air Lease (NYSE: AL) and Rent-A-Center (NASDAQ:RCII) are both transportation companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, dividends, valuation, risk, analyst recommendations, earnings and profitability.

Analyst Ratings

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This is a summary of recent ratings for Air Lease and Rent-A-Center, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Air Lease 1 2 8 0 2.64
Rent-A-Center 1 4 0 0 1.80

Air Lease currently has a consensus target price of $52.35, suggesting a potential upside of 22.95%. Rent-A-Center has a consensus target price of $8.25, suggesting a potential downside of 20.29%. Given Air Lease’s stronger consensus rating and higher possible upside, analysts plainly believe Air Lease is more favorable than Rent-A-Center.

Dividends

Air Lease pays an annual dividend of $0.40 per share and has a dividend yield of 0.9%. Rent-A-Center pays an annual dividend of $0.08 per share and has a dividend yield of 0.8%. Air Lease pays out 11.0% of its earnings in the form of a dividend. Rent-A-Center pays out -14.8% 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. Air Lease has raised its dividend for 4 consecutive years. Air Lease is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

90.5% of Air Lease shares are owned by institutional investors. 9.3% of Air Lease shares are owned by company insiders. Comparatively, 3.4% of Rent-A-Center shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Air Lease and Rent-A-Center’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Air Lease $1.45 billion 3.04 $756.15 million $3.65 11.67
Rent-A-Center $2.70 billion 0.20 $6.65 million ($0.54) -19.17

Air Lease has higher earnings, but lower revenue than Rent-A-Center. Rent-A-Center is trading at a lower price-to-earnings ratio than Air Lease, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Air Lease and Rent-A-Center’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Air Lease 49.87% 10.91% 2.70%
Rent-A-Center 0.25% -11.30% -1.97%

Risk and Volatility

Air Lease has a beta of 1.7, suggesting that its stock price is 70% more volatile than the S&P 500. Comparatively, Rent-A-Center has a beta of 0.73, suggesting that its stock price is 27% less volatile than the S&P 500.

Summary

Air Lease beats Rent-A-Center on 14 of the 16 factors compared between the two stocks.

Air Lease Company Profile

Air Lease Corporation, an aircraft leasing company, engages in the purchase and leasing of commercial jet transport aircraft to airlines worldwide. The company also sells aircraft from its operating lease portfolio to third parties, including other leasing companies, financial services companies, and airlines. In addition, it provides fleet management services to investors and owners of aircraft portfolios. As of December 31, 2017, the company owned a fleet of 244 aircraft, including 188 narrowbody jet aircraft and 56 widebody jet aircraft. Air Lease Corporation was founded in 2010 and is based in Los Angeles, California.

Rent-A-Center Company Profile

Rent-A-Center, Inc., together with its subsidiaries, leases household durable goods to customers on a rent-to-own basis. The company operates through four segments: Core U.S., Acceptance Now, Mexico, and Franchising. It offers durable products, such as consumer electronics; appliances; computers, including tablets; smartphones; and furniture, including accessories under rental purchase agreements. The company also provides merchandise on an installment sales basis; and offers the rent-to-own transaction to consumers who do not qualify for financing from the traditional retailer through kiosks within retailer's locations. It operates retail installment sales stores under the Get It Now and Home Choice names; and rent-to-own and franchised rent-to-own stores under the Rent-A-Centre, ColorTyme, and RimTyme names. As of December 31, 2017, the company owned and operated approximately 2,381 stores in the United States, Canada, and Puerto Rico, including 45 retail installment sales stores; 1,106 Acceptance Now staffed locations in 42 states and Puerto Rico; 125 Acceptance Now Direct locations; and 131 stores in Mexico, as well as franchised 225 rent-to-own stores in 31 states under the Rent-A-Center, ColorTyme, and RimTyme names. Rent-A-Center, Inc. was founded in 1986 and is headquartered in Plano, Texas.

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