Aaron’s Inc. AAN is one of the stocks that have been doing well in the pandemic-ridden market, owing to the momentum in its business in the past two months. Despite the continuity of the COVID-19 outbreak-related woes, the company provided a business update for third-quarter 2020, revealing that solid performances across all products and categories as well as a strong customer base and robust lease portfolio have been contributing to third-quarter performance. As a result, management raised its earnings and sales guidance for the third quarter.

Further, the company has been in investors’ good books on its plans to spin-off into two independent publicly traded companies to sharpen focus and operational execution, while delivering long-term shareholder value. Also, strength in its Progressive business and progress on transformation initiatives for the Aaron’s business is keeping the stock going.

We note that shares of Aaron’s have gained 31.4% in the past three months despite the pandemic-related impacts on its business and the economy on the whole. Meanwhile, the industry has witnessed growth of 32.3% in the same period.



Factors Outlining the Growth Story

Robust Q3 Outlook: Driven by the aforementioned business momentum, Aaron’s anticipates revenues of $1-$1.02 billion for the third quarter, with adjusted earnings of $1.4-$.15 per share. Adjusted EBITDA is projected to be $140-$150 million. This suggests a rise from its earlier view of revenues of $950-$975 million and adjusted earnings of 80-90 cents per share. Segment-wise, revenues in the Progressive segment are envisioned to be $575-$585 million along with adjusted EBITDA of $100-$105 million. Further, invoice growth is likely to increase on a sequential basis to the tune of low to mid-single digits. Notably, strong invoice gain in the segment is likely to continue aiding growth in the quarter.

Moreover, revenues for the Aaron’s Business segment are forecast to