Upbound Group (NASDAQ:UPBD) Announces Quarterly Earnings Results, Beats Estimates By $0.10 EPS

Key Points

• Upbound Group beat quarterly estimates, reporting $1.01 in EPS versus the $0.91 consensus and $1.15 billion in revenue versus expectations of $1.12 billion. Revenue still declined 1.3% year over year, while management raised the midpoint of its full-year EPS outlook to $4.23.
• Profitability improved across key growth businesses: Acima’s adjusted EBITDA rose 15% despite an 11% GMV decline, while Brigit’s revenue increased 37% and adjusted EBITDA jumped 59%. Rent-A-Center posted its fourth consecutive quarter of positive same-store sales growth, though EBITDA remained down year over year.
• Cash flow and leverage strengthened significantly. Free cash flow more than doubled to $121 million, leverage fell to 2.4x, and the company repaid over $225 million of debt; Upbound also plans to repurchase up to $50 million of shares and pays an annualized $1.56 dividend, yielding about 8%.

Upbound Group (NASDAQ:UPBD - Get Free Report) announced its quarterly earnings results on Thursday. The company reported $1.01 earnings per share for the quarter, beating the consensus estimate of $0.91 by $0.10, Zacks reports. The company had revenue of $1.15 billion during the quarter, compared to analysts' expectations of $1.12 billion. Upbound Group had a return on equity of 34.53% and a net margin of 1.90%. Upbound Group's quarterly revenue was down 1.3% on a year-over-year basis. During the same period last year, the business earned $1.00 earnings per share.

Here are the key takeaways from Upbound Group's conference call:

• Upbound exceeded Q3 guidance, reporting $1.15 billion in revenue, $123 million in adjusted EBITDA, and $1.01 in non-GAAP EPS. Management narrowed full-year guidance and raised the midpoint of its EPS outlook to $4.23.
• Acima prioritized profitability over volume; GMV fell 11% and revenue declined 6.5%, but adjusted EBITDA rose 15% to $86 million as lease charge-offs improved to 8.7% and margins expanded 270 basis points. Management expects Q4 GMV to be roughly flat year over year, supported by improving monthly trends and the planned Boost Mobile integration.
• Brigit remained a major growth driver, with revenue up 37%, paying users up 27% to 1.84 million, and adjusted EBITDA up 59% to $15 million. The Experian partnership is gaining users, while the company is cautiously expanding its line-of-credit pilot.
• Rent-A-Center delivered its fourth consecutive quarter of positive same-store sales growth, up 1.8%, and sequential EBITDA improved 4.9%. However, adjusted EBITDA remained down year over year, and store optimization is expected to keep full-year revenue flat to down low single digits.
• Cash generation and balance-sheet improvement were strong, with Q3 free cash flow more than doubling to $121 million, leverage falling to 2.4x, and more than $225 million of debt repaid since year-end. Upbound also plans to repurchase up to $50 million of shares, although expected legal settlement payments will reduce full-year free cash flow relative to operating cash flow.

Upbound Group Price Performance

NASDAQ UPBD traded up $2.54 during mid-day trading on Thursday, hitting $19.45. The stock had a trading volume of 1,590,251 shares, compared to its average volume of 914,733. Upbound Group has a twelve month low of $14.98 and a twelve month high of $23.98. The stock has a market capitalization of $1.13 billion, a price-to-earnings ratio of 12.61 and a beta of 1.78. The firm's 50 day moving average is $17.18 and its 200 day moving average is $18.87. The company has a debt-to-equity ratio of 1.94, a current ratio of 3.22 and a quick ratio of 0.97.

Upbound Group Announces Dividend

The company also recently declared a quarterly dividend, which was paid on Tuesday, October 27th. Investors of record on Tuesday, October 6th were given a dividend of $0.39 per share. This represents a $1.56 annualized dividend and a dividend yield of 8.0%. The ex-dividend date was Tuesday, October 6th. Upbound Group's payout ratio is presently 101.30%.

Insider Buying and Selling

In other Upbound Group news, EVP Anthony Blasquez sold 10,000 shares of the company's stock in a transaction on Friday, August 21st. The stock was sold at an average price of $18.85, for a total value of $188,500.00. Following the completion of the sale, the executive vice president directly owned 43,717 shares in the company, valued at $824,065.45. This represents a 18.62% decrease in their position. The sale was disclosed in a filing with the Securities & Exchange Commission, which is available through the SEC website. Insiders own 1.20% of the company's stock.

Analysts Set New Price Targets

A number of research analysts have weighed in on the stock. TD Cowen cut their price objective on shares of Upbound Group from $28.00 to $27.00 and set a "buy" rating for the company in a report on Tuesday, October 6th. BTIG Research lowered Upbound Group from a "buy" rating to a "neutral" rating and set a $28.00 price target for the company. in a research note on Friday, July 31st. Weiss Ratings cut Upbound Group from a "hold (c)" rating to a "hold (c-)" rating in a report on Monday, September 21st. Wall Street Zen downgraded Upbound Group from a "buy" rating to a "hold" rating in a research report on Saturday, October 24th. Finally, Zacks Research raised Upbound Group from a "strong sell" rating to a "hold" rating in a report on Monday, September 28th. One equities research analyst has rated the stock with a Buy rating and three have given a Hold rating to the company. Based on data from MarketBeat.com, Upbound Group presently has an average rating of "Hold" and an average price target of $27.50.

About Upbound Group

Upbound Group, Inc is a provider of consumer leasing and retail solutions, operating primarily through its Rent-A-Center and Acima brands. The company enables customers to obtain merchandise through flexible lease-to-own agreements and related payment options, serving consumers who may prefer alternatives to traditional retail financing.

Its Rent-A-Center business operates company-owned and franchised locations, as well as digital channels, offering furniture, appliances, electronics, computers, smartphones and other household goods.

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