Company Performance - PROG Holdings reported quarterly earnings of $0.77 per share, exceeding the Zacks Consensus Estimate of $0.76 per share, but down from $0.90 per share a year ago, representing an earnings surprise of 1.32% [1] - The company posted revenues of $606.15 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 1.09% and up from $582.88 million year-over-year [1] - Over the last four quarters, PROG Holdings has consistently surpassed consensus EPS and revenue estimates [1] Stock Performance - PROG Holdings shares have increased approximately 52% since the beginning of the year, significantly outperforming the S&P 500's gain of 22.7% [2] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [4] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.75 on revenues of $601.84 million, and for the current fiscal year, it is $3.34 on revenues of $2.44 billion [4] - The trend of estimate revisions for PROG Holdings is mixed, which may change following the recent earnings report [4] Industry Context - The Financial - Consumer Loans industry, to which PROG Holdings belongs, is currently ranked in the bottom 43% of over 250 Zacks industries, which may impact stock performance [5] - Another company in the same industry, Capital One, is expected to report quarterly earnings of $3.70 per share, reflecting a year-over-year decline of 16.9% [5]

Revenue and Earnings - The company reported revenues of $606.1 million for Q3 2024, a 4.0% increase from $582.9 million in Q3 2023[86]. - Lease revenues and fees increased by 3.3% to $582,551,000 compared to $564,183,000 in the same period last year[92]. - Net earnings surged to $83,962,000, a significant increase from $35,012,000 in the same quarter of 2023[92]. - Total revenues for the nine months ended September 30, 2024, were $1,840,176, a 0.5% increase from $1,830,863 in the same period of 2023[100]. - Net earnings increased by 16.2% to $139,702, up from $120,263 in the prior year[100]. Gross Merchandise Volume (GMV) - Gross Merchandise Volume (GMV) for Progressive Leasing increased by $47.5 million (11.6%) to $456.7 million, while Vive's GMV rose by $3.5 million (10.0%) to $38.8 million compared to Q3 2023[87]. - Total GMV for the company reached $557.5 million, reflecting a 20.1% increase from $464.0 million in the same quarter last year[87]. - The increase in Progressive Leasing revenues was primarily due to an 11.6% increase in gross merchandise volume compared to the same quarter in 2023[93]. Customer Metrics - Active customer count for Progressive Leasing grew to 848,000, up from 820,000 in the prior year, driven by strategic initiatives and tightening credit supply[89]. - E-commerce channels contributed 16.6% of Progressive Leasing's GMV in Q3 2024, up from 14.8% in Q3 2023[87]. Operating Performance - Earnings before income taxes decreased to $41.8 million in Q3 2024, down from $48.1 million in Q3 2023, primarily due to higher provisions for lease merchandise write-offs and loan losses[86]. - Operating profit decreased by 10.3% to $49,231,000, down from $54,884,000 in the prior year[92]. - Operating profit decreased by 23.9% to $144,726 from $190,259 in the same period last year[100]. Costs and Expenses - The company incurred $0.1 million and $0.3 million in costs related to a cybersecurity incident for Q3 2024 and year-to-date, respectively, totaling $3.2 million since the incident occurred[84]. - Total operating expenses rose by 1.8% to $111,108,000 from $109,183,000 year-over-year[95]. - Personnel costs decreased by 9.6% to $42,260,000, down from $46,729,000 in the same quarter last year[95]. - Provision for lease merchandise write-offs increased by $7,770,000, representing a 21.0% rise compared to the previous year[92]. - Restructuring expenses rose significantly by $18.9 million due to additional restructuring activities during the nine months ended September 30, 2024[104]. Tax and Income - The effective income tax rate was (100.6)% for the three months ended September 30, 2024, compared to 27.2% for the same period in 2023[99]. - Income tax benefit for the nine months ended September 30, 2024 was $17.9 million, compared to an expense of $47.4 million in the prior year, resulting in an effective tax rate of (14.7)% versus 28.3% in 2023[109]. Cash Flow and Investments - Cash and cash equivalents increased by $66.3 million to $221.7 million as of September 30, 2024[111]. - Cash provided by operating activities was $223.0 million for the nine months ended September 30, 2024, down from $292.5 million in the same period in 2023, a decrease of $69.5 million[114]. - Cash used in investing activities increased to $35.6 million from $18.8 million year-over-year, driven by a $143.1 million increase in cash investments in loans receivable[115]. - Cash used in financing activities was $121.1 million, including $98.2 million for stock repurchases and $15.4 million in dividends[116]. Shareholder Returns - The company repurchased 2,620,562 shares for $98.2 million during the nine months ended September 30, 2024, with remaining authorization for an additional $401.8 million[118]. - Aggregate dividend payments during the nine months ended September 30, 2024 totaled $15.4 million, with a quarterly cash dividend of $0.12 per share declared on August 8, 2024[119]. Debt and Commitments - As of September 30, 2024, the company had $600.0 million in indebtedness and $350.0 million available under the Revolving Facility, with no outstanding balance[120]. - Unfunded lending commitments through the Vive business totaled approximately $498.7 million as of September 30, 2024, down from $523.9 million at the end of 2023[124].

Financial Performance - Consolidated revenues for Q3 2024 were $606.1 million, a 4.0% increase from Q3 2023[3]. - Net earnings for the quarter were $84.0 million, significantly up from $35.0 million in the prior year, primarily due to a $53.6 million non-cash tax benefit[4]. - Adjusted EBITDA for Q3 2024 was $63.5 million, representing 10.5% of revenues, down from 12.3% in the same period last year[4]. - Diluted EPS for Q3 2024 was $1.94, compared to $0.76 in the same period last year; non-GAAP diluted EPS was $0.77, down from $0.90[5]. - Net earnings for the nine months ended September 30, 2024, were $139,702, up 16.2% from $120,263 in the same period of 2023[15]. - Basic earnings per share for Q3 2024 were $1.99, significantly higher than $0.77 in Q3 2023[13]. - Consolidated total net earnings for the nine months ended September 30, 2024, were $139,702,000, compared to $120,263,000 for the same period in 2023, representing a year-over-year increase of approximately 16.2%[31][32]. Revenue and Growth Metrics - Progressive Leasing's GMV reached $456.7 million, reflecting an 11.6% year-over-year growth[6]. - Total revenues for the three months ended September 30, 2024, reached $606,145 thousand, an increase from $582,877 thousand in the same period of 2023, representing a growth of approximately 4.3%[16][17]. - Lease revenues and fees for Q3 2024 reached $582,551, an increase of 3.3% from $564,183 in Q3 2023[13]. - Interest and fees on loans receivable totaled $23,594 for Q3 2024, compared to $18,694 in Q3 2023, reflecting a growth of 26.5%[13]. - The company experienced a gross merchandise volume of $557,464 thousand for the three months ended September 30, 2024, compared to $464,044 thousand in the same period of 2023, indicating a growth of approximately 20.1%[21]. Cash and Debt Management - The company ended Q3 2024 with cash of $221.7 million and gross debt of $600 million[7]. - Cash and cash equivalents increased to $221,726 as of September 30, 2024, compared to $155,416 at the end of 2023, marking a growth of 42.5%[14]. - Total liabilities decreased to $815,533 as of September 30, 2024, compared to $899,924 at the end of 2023, a reduction of 9.4%[14]. - The company repurchased $37.0 million of its stock at an average price of $45.69 per share, with $401.8 million remaining under its repurchase program[7]. Future Outlook and Projections - The full year 2024 revenue outlook was revised to a range of $2,440,000 to $2,460,000, with net earnings expected between $165,500 and $170,500[8]. - The company anticipates continued focus on market expansion and new product development in the upcoming quarters, aiming to enhance revenue streams and customer engagement[22]. - The projected adjusted EBITDA for the full year 2024 is estimated to be between $270,000,000 and $275,000,000, reflecting a potential decline from previous estimates[33][35]. - The company expects net earnings for the full year 2024 to range from $165,500,000 to $170,500,000, with projected earnings before income tax expenses of $162,500,000 to $165,500,000[33]. - The projected non-GAAP earnings per share for the full year 2024 is expected to be between $3.30 and $3.40, reflecting adjustments for intangible amortization and restructuring expenses[38][39]. Operational Metrics and Expenses - The provision for lease merchandise write-offs was 7.7%, within the targeted annual range of 6%-8%[6]. - The company reported a provision for lease merchandise write-offs of $44,736 in Q3 2024, compared to $36,966 in Q3 2023, indicating an increase of 21.0%[13]. - Stock-based compensation for the nine months ended September 30, 2024, was $21,588,000, compared to $19,081,000 for the same period in 2023, showing an increase of approximately 13.2%[31][32]. - Restructuring expenses for the nine months ended September 30, 2024, totaled $20,906,000, compared to $1,958,000 for the same period in 2023, indicating a significant increase[31][32]. - Interest expense for the full year 2024 is projected to be between $31,000,000 and $32,000,000, with depreciation and amortization expected to total $9,500,000 and $18,000,000, respectively[33][35]. Non-GAAP Financial Measures - Non-GAAP net earnings for the three months ended September 30, 2024, were $33,412 thousand, compared to $41,676 thousand in the same period of 2023, reflecting a decrease of approximately 19.8%[28]. - Adjusted EBITDA for the nine months ended September 30, 2024, was $208,346,000, compared to $236,455,000 for the same period in 2023, indicating a decrease of about 11.9%[31][32]. - Management emphasizes the importance of non-GAAP financial measures in assessing the company's performance and making strategic decisions, highlighting their relevance in the industry[24][25].

Group 1 - The stock of PROG Holdings, Inc. (PRG) is experiencing significant attention due to high implied volatility in the options market, particularly the Oct. 18, 2024 $22.50 Call option [1] - Implied volatility indicates the market's expectation of future price movement, suggesting that investors anticipate a significant price change or an upcoming event that could lead to a rally or sell-off [2] - PROG Holdings is currently rated as a Zacks Rank 1 (Strong Buy) in the Financial - Consumer Loans industry, which is in the top 26% of the Zacks Industry Rank [3] Group 2 - Over the past 60 days, two analysts have raised their earnings estimates for PROG Holdings for the current quarter, increasing the Zacks Consensus Estimate from 62 cents per share to 76 cents [3] - The high implied volatility may indicate a developing trading opportunity, as options traders often seek to sell premium on options with high implied volatility to capture decay [4]

For those looking to find strong Finance stocks, it is prudent to search for companies in the group that are outperforming their peers. PROG Holdings (PRG) is a stock that can certainly grab the attention of many investors, but do its recent returns compare favorably to the sector as a whole? Let's take a closer look at the stock's year-to-date performance to find out. PROG Holdings is a member of the Finance sector. This group includes 860 individual stocks and currently holds a Zacks Sector Rank of #2. Th ...

Momentum investors typically don't time the market or "buy low and sell high." In other words, they avoid betting on cheap stocks and waiting long for them to recover. Instead, they believe that "buying high and selling higher" is the way to make far more money in lesser time. A safer approach could be investing in bargain stocks with recent price momentum. While the Zacks Momentum Style Score (part of the Zacks Style Scores system) helps identify great momentum stocks by paying close attention to trends in ...

Valuation Metrics In terms of its value breakdown, the stock currently trades at 13.2X current fiscal year EPS estimates, which is a premium to the peer industry average of 10.4X. On a trailing cash flow basis, the stock currently trades at 1.1X versus its peer group's average of 7.2X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective. What's Driving the Outperformance? On this front, we can look at the Zacks Style Scores, as they provide investors with ...

Financial Data and Key Metrics Changes - The company reported consolidated revenue of $592.2 million for Q2 2024, exceeding the high end of the outlook by $17.2 million, and a year-over-year increase from $492.8 million in Q2 2023 [27][68] - Non-GAAP diluted EPS was $0.92, beating expectations by $0.17, supported by a reduced share count from the share repurchase program [17][56] - Adjusted EBITDA reached $72.3 million, resulting in a 12.2% margin, compared to $75 million and 12.7% in the same period last year [40][27] Business Line Data and Key Metrics Changes - The progressive leasing segment's GMV increased by 7.9% year-over-year, surpassing initial projections of low single-digit growth [64] - Revenue for the progressive leasing segment declined 0.8% from $574.8 million in Q2 2023 to $570.5 million, primarily due to a 4.7% decrease in gross lease asset balance [65] - The write-off rate for the progressive leasing segment was 7.7%, consistent with pre-pandemic levels, and is expected to be the peak for 2024 [10][38] Market Data and Key Metrics Changes - The company experienced GMV growth in both regional and national markets, with a year-over-year increase in the number of active doors and GMV per door in the regional market [11] - The GLA balance at the end of Q2 2024 was down 0.7% compared to the same period last year, showing improvement from previous quarters [36] Company Strategy and Development Direction - The company is focused on enhancing customer and retailer experiences, deepening integrations with partners, and expanding affiliate relationships through the PROG marketplace [6][28] - Strategic pillars include Grow, Enhance, and Expand, which are aimed at driving GMV performance and market share [28][42] - The company plans to continue funding growth, pursue strategic M&A opportunities, and return excess cash to shareholders through dividends and share repurchases [16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about achieving low single-digit GMV growth for the progressive leasing segment despite ongoing macroeconomic challenges [26] - The company expects Q3 GMV to grow in the high single digits and anticipates write-offs to remain within the targeted annual range of 6% to 8% [33][72] - Management highlighted the positive impact of credit tightening on the business and the expectation that these conditions will persist [93] Other Important Information - The company completed two custom e-commerce integrations in the first half of 2024 and has a robust pipeline for additional integrations [30] - The PROG marketplace has delivered over 250% growth year-to-date through June 30, 2024 [57] Q&A Session Summary Question: Growth drivers in the business - Management noted that GMV performance was strong and consistent, with improvements in existing retail partnerships contributing to productivity [48] Question: Retail landscape and bankruptcy risks - Management acknowledged the dynamic retail environment and emphasized direct communication with customers to navigate changes effectively [50] Question: Credit tightening sustainability - Management confirmed that while credit conditions are expected to remain tight, the impact on the business is viewed positively [93] Question: PROG Marketplace growth and integration - Management highlighted successful conversions from PROG Marketplace relationships to direct integrations, driven by increased volume [81] Question: Write-offs and gross margin pressure - Management explained that Q2 typically sees higher write-offs, and the trend of increased 90-day purchases may impact gross margins in Q3 [97]

Core Insights - PROG Holdings (PRG) reported quarterly earnings of $0.92 per share, exceeding the Zacks Consensus Estimate of $0.71 per share, with an earnings surprise of 29.58% [1] - The company posted revenues of $592.16 million for the quarter ended June 2024, surpassing the Zacks Consensus Estimate by 3.57% [2] - PROG Holdings has consistently surpassed consensus EPS estimates over the last four quarters [2] Financial Performance - The earnings for the same quarter last year were also $0.92 per share, indicating no year-over-year growth in earnings [1] - The revenues for the same quarter last year were $592.85 million, showing a slight decline in revenue year-over-year [2] - The current consensus EPS estimate for the upcoming quarter is $0.62, with expected revenues of $552.52 million, and for the current fiscal year, the EPS estimate is $2.98 on revenues of $2.35 billion [7] Market Position - PROG Holdings shares have increased by approximately 12% since the beginning of the year, while the S&P 500 has gained 16.5% [3] - The company currently holds a Zacks Rank 4 (Sell), indicating expectations of underperformance in the near future [6] - The Financial - Consumer Loans industry, to which PROG Holdings belongs, is ranked in the top 37% of over 250 Zacks industries, suggesting a relatively strong industry position [8] Future Outlook - The sustainability of the stock's price movement will depend on management's commentary during the earnings call and future earnings expectations [3][4] - The trend of estimate revisions for PROG Holdings has been unfavorable leading up to the earnings release, which may impact future performance [6] - Another company in the same industry, Encore Capital Group, is expected to report earnings soon, with a projected EPS of $1.26, indicating a year-over-year increase of 16.7% [9]

Revenue and GMV Performance - The company reported revenues of $592.2 million for Q2 2024, relatively flat compared to $592.8 million in Q2 2023[124]. - Progressive Leasing's Gross Merchandise Volume (GMV) increased by $33.3 million to $454.5 million, a 7.9% increase year-over-year[125]. - Vive's GMV decreased by $4.1 million to $35.8 million, a decline of 10.3% compared to the same period in 2023[125]. - Total GMV for the company increased by $70.7 million to $546.4 million, representing a 14.9% increase year-over-year[125]. - Total revenues for the three months ended June 30, 2024, were $592,161, a decrease of 0.1% from $592,846 in the same period of 2023[136]. - Lease revenues and fees for the second quarter of 2024 were $570,516, down 0.6% from $574,839 in the prior year[136]. - Total revenues for the six months ended June 30, 2024, were $1,234,031,000, a slight decrease from $1,247,986,000 in the same period of 2023[146]. - Lease revenues and fees for Progressive Leasing were $1,191,066,000, down from $1,211,921,000 year-over-year[146]. Customer Metrics - The active customer count for Progressive Leasing was 834, slightly down from 843 in the previous year[127]. - The active customer count for Vive decreased to 85 from 90 year-over-year[127]. Earnings and Expenses - Earnings before income taxes decreased to $48.3 million, down from $52.0 million in Q2 2023, a decline of 7.1%[130]. - Operating expenses for the three months ended June 30, 2024, were $107,901, a slight increase of 0.2% from $107,710 in the same period of 2023[138]. - Earnings before income tax expense for the three months ended June 30, 2024, were $48,339, a decrease of 7.1% from $52,014 in the same period of 2023[142]. - Net interest expense for the three months ended June 30, 2024, was $7,339, an increase of 0.8% from $7,283 in the same period of 2023[141]. - Operating expenses increased by 10.5% to $235,242,000 compared to $212,969,000 in the prior year[147]. Tax and Provisions - The effective income tax rate for the three months ended June 30, 2024, was 30.1%, compared to 28.4% in the same period of 2023[143]. - The provision for lease merchandise write-offs increased to 7.7% of lease revenues in Q2 2024, up from 7.1% in Q2 2023[139]. - The provision for loan losses increased by 36.9% to $12,035 in Q2 2024, compared to $8,791 in Q2 2023[138]. - The provision for loan losses rose by 31.9% to $23,084,000, driven by growth in other strategic operations[147]. - The effective tax rate increased to 30.2% for the six months ended June 30, 2024, compared to 28.7% in the same period of 2023[150]. Cash Flow and Investments - Cash provided by operating activities decreased to $191,100,000 from $205,400,000 year-over-year[154]. - Cash used in investing activities increased to $17,800,000 from $10,600,000, primarily due to an $81,800,000 increase in cash investments in loans receivable[159]. - Cash used in financing activities was $78,600,000, compared to $73,800,000 in the same period last year, mainly for stock repurchases and dividends[160]. - The company repurchased 1,810,562 shares for $61,200,000 during the six months ended June 30, 2024[161]. Debt and Financial Compliance - The Company has a $350.0 million senior revolving credit facility with no outstanding balance as of June 30, 2024, and $350.0 million available for borrowings[163]. - As of June 30, 2024, the Company was in compliance with financial covenants requiring a total net debt to EBITDA ratio of no more than 2.50:1.00 and consolidated interest coverage of no less than 3.00:1.00[163]. - The Company issued $600 million in senior unsecured notes due 2029 at a fixed annual interest rate of 6.00%, with interest payable semi-annually[165]. - The Company had no outstanding borrowings under its Revolving Facility as of June 30, 2024, and a hypothetical 1.0% change in interest rates would not affect interest expense[170]. Internal Controls and Compliance - The Company’s disclosure controls and procedures were evaluated as effective as of the end of the reporting period[172]. - There were no changes in the Company's internal control over financial reporting that materially affected its operations during the three and six months ended June 30, 2024[173].