GICS Sector : Technology
Upbound Group, Inc., an omni-channel platform company, leases household durable goods to customers on a lease-to-own basis in the United States, Puerto Rico, and Mexico.The company operates in four segments: Rent-A-Center Business, Acima, Mexico, and Franchising.The company's brands, such as Rent-A-Center and Acima that facilitate consumer transactions across a range of store-based and virtual channels.
Upbound Group, Inc. reported a robust Q3 2025, with revenue reaching $1.16 billion, a 9% year-over-year increase. The company's adjusted EBITDA was $123.6 million, up 5.7% year-over-year, and non-GAAP diluted EPS was $1, a 5.3% increase year-over-year. The revenue growth was driven by the company's diverse segments, including Rent-A-Center, Acima, and Brigit. The adjusted EBITDA margins were 12%, a decline from 13.3% in the year-ago period, primarily due to the gross margin impact from the expansion of the jewelry segment and an increase in lease charge-off rate.
Publication Date: Nov -26
The Rent-A-Center segment saw a 40-basis-point improvement in same-store sales to -3.6% year-over-year, and the company expects same-store sales to approach flat to positive comps in Q4. Acima delivered its eighth consecutive quarter of GMV growth, with an 11% year-over-year increase. Brigit maintained impressive momentum with 40% revenue growth and 27% subscriber growth year-over-year. Fahmi Karam noted that 90% of GMV growth came from new merchants, while 10% came from productivity of existing merchants, highlighting the success of Acima's strategy.
With a P/E Ratio of 12.24 and an EV/EBITDA of 2.03, the company's valuation appears reasonable. The market seems to have priced in a moderate growth trajectory. However, with the company's expectations of high single-digits to low double-digit GMV growth at Acima for the year and Brigit's adjusted EBITDA margin over 16%, there is potential for upside. The company's guidance for 2026, with Acima's GMV growth expected to be in the high single-digit to low double-digit territory, suggests a positive outlook.
The company generated $50 million of free cash flow in Q3, resulting in a year-to-date total of $167 million. The company's liquidity position is strong, with over $350 million in liquidity and a net leverage ratio of approximately 2.9x. The $150 million from tax benefits provides flexibility for growth, deleveraging, and potential M&A, indicating a healthy financial position.
Acima and Bob's Discount Furniture Announce Exclusive Collaboration to Provide Innovative Lease-to-Own Solution
Dec -03
Teacher Retirement System of Texas Grows Position in Upbound Group, Inc. $UPBD
Nov -05
UPBD Cuts 2025 View Despite Reporting Q3 Earnings & Sales Beat
Oct -30
Upbound Group, Inc. (UPBD) Q3 2025 Earnings Call Transcript
Oct -30
Upbound Group (UPBD) Reports Q3 Earnings: What Key Metrics Have to Say
Oct -30
Upbound Group (UPBD) Tops Q3 Earnings and Revenue Estimates
Oct -30
Upbound Group, Inc. Reports Third Quarter 2025 Results
Oct -30
Yousif Capital Management LLC Has $479,000 Stake in Upbound Group, Inc. $UPBD
Oct -24
Acima's 2.5% growth is driven by increasing demand for point-of-sale financing solutions, expansion into new retail partnerships, and strategic investments in digital capabilities. Additionally, the rise of omnichannel shopping and growing consumer preference for flexible payment options contribute to the segment's growth.
Rent-A-Center's 2.8% growth is driven by increasing demand for affordable furniture and appliances, expansion into new markets, and strategic partnerships. The company's flexible rental options and omnichannel approach also contribute to its growth, as well as its focus on improving customer experience and loyalty.
Upbound Group, Inc.'s franchising growth of 2.2% is driven by increasing demand for proven business models, expansion into new markets, and strategic partnerships. Additionally, the company's focus on digital transformation, operational efficiency, and strong brand recognition contribute to its growth momentum.
Mexico's 3.5% growth is driven by a combination of factors, including a growing middle class, increasing foreign investment, and a competitive manufacturing sector. Additionally, the country's proximity to the US and its participation in the USMCA trade agreement have boosted exports, while a stable macroeconomic environment and investments in infrastructure have supported domestic consumption.
Rook is an open-source storage orchestrator for Kubernetes, providing a cloud-native storage experience.
Crossplane is an open-source control plane for multicloud and edge environments, providing a unified API for infrastructure and services.
Upbound Cloud is a managed platform for Kubernetes and cloud-native applications, providing a simplified and secure way to deploy and manage workloads.
The threat of substitutes for Upbound Group, Inc. is moderate, as there are some alternatives available in the market, but they are not very attractive to customers.
The bargaining power of customers is high, as they have many options available in the market and can easily switch to competitors.
The bargaining power of suppliers is low, as Upbound Group, Inc. is a large company and has many suppliers to choose from.
The threat of new entrants is moderate, as there are some barriers to entry in the market, but it is still possible for new companies to enter.
The intensity of rivalry is high, as there are many competitors in the market and they are all competing for market share.
| Value | |
|---|---|
| Debt Weight | 71.62% |
| Debt Cost | 3.95% |
| Equity Weight | 28.38% |
| Equity Cost | 13.88% |
| WACC | 6.77% |
| Leverage | 252.32% |
Value: 9.3
Growth: 6.7
Quality: 6.0
Yield: 5.0
Momentum: 3.0
Volatility: 6.0
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