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Upbound Group (UPBD)
NASDAQ:UPBD
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Upbound Group
(NASDAQ:UPBD)
65Neutral
Positive Factors
Financial Performance
UPBD beat consensus on major revenue line (rentals & fees and store merchandise sales).
Market Valuation
UPBD shares are considered very cheap with 54% upside potential to a target price based on a higher price-to-earnings multiple.
Negative Factors
Cost Management
The beat in revenues was more than offset by higher cost of revenue, particularly in cost of rentals and fees.
Upbound Group (UPBD) vs. S&P 500 (SPY)
Market Cap
$1.48B
Dividend Yield5.81%
Average Volume (3M)565.82K
Price to Earnings (P/E)11.7
Beta (1Y)1.27
Revenue Growth8.22%
EPS GrowthN/A
CountryUS
Employees12,970
SectorTechnology
Sector Strength45
IndustryCorporate Services
Share Statistics
EPS (TTM)2.21
Shares Outstanding57,423,573
10 Day Avg. Volume726,077
30 Day Avg. Volume565,815
Financial Highlights & Ratios
PEG Ratio0.02
Price to Book (P/B)N/A
Price to Sales (P/S)0.34
Price to Cash Flow (P/CF)-6.00
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$38.17Price Target Upside51.65% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
Upbound Group Business Overview & Revenue Model
Company DescriptionUpbound Group (UPBD) is a company that operates in the consumer financial services sector, focusing on providing innovative financial solutions to underserved populations. The company offers a range of products and services that include credit solutions, leasing options, and financial education, catering to individuals and businesses looking for accessible and flexible financial assistance.
How the Company Makes MoneyUpbound Group makes money primarily through interest and fees generated from its credit and leasing services. Its revenue streams include interest income from loans provided to consumers and businesses, leasing fees from rental agreements, and service fees for financial education and consultancy services. The company may also form strategic partnerships with retailers and other financial institutions to expand its market reach and enhance its service offerings, which can contribute to its earnings.
Upbound Group Financial Statement Overview
Summary
Upbound Group shows a strong financial position with growth in revenues and improved profitability margins. The balance sheet reflects a conservative debt profile, though there is potential to enhance equity returns. Cash flow management is solid, yet focusing on boosting free cash flow growth will be essential for future resilience.Income Statement
Upbound Group has demonstrated strong revenue growth over the last year, with a growth rate of 8.23%. The gross profit margin stands at 48.13%, indicating solid cost management. The net profit margin improved significantly to 2.86% from a negative position previously, reflecting enhanced profitability. The EBIT margin of 6.75% and EBITDA margin of 7.84% further support the company’s operational efficiency.78
Positive
Balance Sheet
The debt-to-equity ratio is relatively low at 0.43, suggesting conservative use of leverage. However, the return on equity is modest at 19.64%, which indicates potential for improvement. The equity ratio of 23.73% points to a balanced capital structure, although there is room to increase equity to enhance financial stability.72
Positive
Cash Flow
Free cash flow has exhibited a decline, but the operating cash flow remains healthy with a ratio of 0.85 to net income, indicating good cash conversion. The free cash flow to net income ratio of 0.85 suggests effective capital management, but there is a need to improve free cash flow growth to sustain long-term operations.65
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 4.32B | 3.99B | 4.25B | 4.58B | 2.81B | Gross Profit |
| 2.08B | 1.28B | 2.08B | 2.24B | 1.67B | EBIT |
| 291.63M | 162.87M | 148.54M | 280.54M | 237.34M | EBITDA |
| 339.01M | 290.54M | 283.05M | 435.01M | 294.77M | Net Income Common Stockholders |
| 123.48M | -5.18M | 12.36M | 134.94M | 208.12M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 60.86M | 93.70M | 144.14M | 108.33M | 159.45M | Total Assets |
| 2.65B | 2.72B | 2.76B | 2.99B | 1.75B | Total Debt |
| 272.98M | 1.60B | 305.56M | 296.54M | 285.35M | Net Debt |
| 212.12M | 1.51B | 161.41M | 188.20M | 125.91M | Total Liabilities |
| 2.02B | 2.16B | 2.24B | 2.48B | 1.16B | Stockholders Equity |
| 628.98M | 560.37M | 525.15M | 513.28M | 592.08M |
| Cash Flow | Free Cash Flow | |||
| 48.45M | 146.89M | 407.07M | 329.85M | 201.96M | Operating Cash Flow |
| 104.72M | 200.29M | 468.46M | 392.30M | 236.50M | Investing Cash Flow |
| -41.51M | -50.96M | -62.33M | -1.34B | -20.61M | Financing Cash Flow |
| -93.52M | -202.12M | -370.71M | 892.85M | -126.68M |
Upbound Group Technical Analysis
Negative
25.17
Price Trends
28.45
Negative
29.82
Negative
30.39
Negative
Market Momentum
-1.13
Positive
35.42
Neutral
43.68
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For UPBD, the sentiment is Negative. The current price of 25.17 is below the 20-day moving average (MA) of 27.01, below the 50-day MA of 28.45, and below the 200-day MA of 30.39, indicating a bearish trend. The MACD of -1.13 indicates Positive momentum. The RSI at 35.42 is Neutral, neither overbought nor oversold. The STOCH value of 43.68 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for UPBD.
Upbound Group Peers Comparison
Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Performance Comparison
UPBD
Upbound Group
25.17
-6.81
-21.29%
BSET
Bassett Furniture
15.75
1.63
11.54%
W
Wayfair
34.08
-30.34
-47.10%
Upbound Group Earnings Call Summary
Earnings Call Date: Feb 20, 2025 | % Change Since: -13.53% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Positive
Upbound Group demonstrated strong growth, particularly through Assima's performance and successful acquisitions. However, Rent-A-Center faced challenges, and there is ongoing pressure in the furniture segment. Despite these challenges, the company remains optimistic about future growth, particularly through technology-driven initiatives.Highlights
Strong Revenue Growth
Revenue for the fourth quarter increased by 6% year-over-year, driven primarily by Assima's performance. Full-year revenue grew 8.2% to over $4.3 billion.
Assima's Impressive Performance
Assima delivered top-line growth of over 17% for the year, with revenue ending at approximately $2.3 billion. The segment achieved double-digit growth for four consecutive quarters.
Successful Acquisitions and Integration
The acquisitions of Assima and Bridgion were highlighted as transformative, establishing Upbound as a technology-driven growth company. Bridgion brings new digital products like earned wage access and credit building programs.
Improved Profitability Metrics
Adjusted EBITDA for the fourth quarter increased by over 14% year-over-year, with margins rising 80 basis points to 11.4%. Full-year adjusted EBITDA was over $473 million, up 3.8% from the prior year.
Assima's Expanding Customer Base
Assima onboarded nearly a million new customers in 2024, with GMV for the fourth quarter growing by 15.3% year-over-year.
Lowlights
Rent-A-Center Challenges
Rent-A-Center faced a challenging environment, with revenue declining by approximately $15 million year-over-year due to store consolidations and franchise sales.
Pressure on Furniture Segment
The furniture segment, a significant portion of the business, faced ongoing pressure with no major recovery expected in 2025.
Regulatory and Economic Uncertainty
Macroeconomic conditions and regulatory uncertainty, including potential impacts from the CFPB and international geopolitical factors, were noted as challenges.
Company Guidance
During the Upbound Group's fourth quarter 2024 earnings call, guidance for 2025 was shared with several key metrics outlined. The company projects revenue to range from $4.5 billion to $4.75 billion and adjusted EBITDA between $500 million to $540 million. Non-GAAP earnings per share are expected to be between $3.90 to $4.40, with free cash flow estimated at $150 million to $200 million. Assima is anticipated to deliver high single digits to low double digits growth in GMV and revenue, with improved adjusted EBITDA margins moving towards the mid-teens. Rent-A-Center's revenue is expected to decrease in the low single-digit range due to store consolidations, with adjusted EBITDA margins projected to be in the mid-teens. Bridgion, recently acquired, is expected to contribute revenue between $200 million and $230 million and adjusted EBITDA in the $25 million to $30 million range. The company also aims to maintain a tax rate of approximately 26% and anticipates a steady average diluted share count of about 58.9 million shares.Upbound Group Corporate Events
Executive/Board ChangesBusiness Operations and StrategyFinancial Disclosures
Upbound Group Announces CEO Retirement and Successor
Positive
Feb 20, 2025
On February 20, 2025, Upbound Group announced the retirement of CEO Mitchell E. Fadel effective June 1, 2025, with CFO Fahmi Karam succeeding him. Mr. Karam’s appointment reflects a strategic shift, leveraging his extensive background in finance and operations to guide the company forward. This leadership change coincides with the release of Upbound’s 2024 financial results, reporting a total revenue of $4.3 billion and a GAAP diluted EPS of $2.21 for the year, indicating a robust performance in its financial solutions market. The transition aims to strengthen Upbound’s industry position and enhance value for stakeholders.
M&A TransactionsBusiness Operations and Strategy
Upbound Group Expands with Brigit Acquisition
Positive
Feb 5, 2025
On January 31, 2025, Upbound Group, Inc. completed its acquisition of Brigit, a financial health technology firm, to expand its technology-driven offerings and enhance its financial solutions platform. This strategic acquisition is expected to boost Upbound’s growth by integrating Brigit’s cash flow underwriting data and tech stack, which will improve risk management and customer approvals, and extend financial services to more consumers, including earned wage access and credit building products.
M&A TransactionsBusiness Operations and Strategy
Upbound Group Expands with Brigit Acquisition Agreement
Positive
Dec 12, 2024
Upbound Group, Inc. has entered into an agreement to acquire Brigit, a financial health technology firm, for up to $460 million. This acquisition aims to expand Upbound’s financial solutions for underserved customers and is expected to enhance its technological capabilities, increase revenue, and improve customer experience through Brigit’s AI/ML models and digital platform. The transaction is anticipated to be financially beneficial, with significant projected growth in revenue and Adjusted EBITDA, and is expected to close in Q1 2025, subject to regulatory approvals.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.