Aaron's, the rent-to-own chain, will split stock 3-to-2

Holders of both common stock and Class A common stock on April 1 will receive the distribution of new shares and cash payments on April 15.

Shareholders will receive half of a new share for each share held. To explain, Danielson said if a shareholder owns one share valued at $30, on April 15 it will become one-and-a-half shares valued at $20.

Companies generally split their stock to generate more interest from “retail” or average investors as opposed to large, institutional ones, said David Magee, a research analyst with SunTrust Robinson Humphrey in Atlanta.

“The theory is by keeping the price more modest, you maintain a certain level of interest among retail investors,” said Magee.

Danielson said that when Aaron’s shares trade at about $30, the board generally decides to split the stock, although he stopped short of calling it a guideline.

He said the split should “create a little buzz. People see it ... as a reflection of confidence in the future of the company.”

The stock closed Thursday at $33.06. The price does not yet reflect the stock split, which was announced Tuesday.

Stock splits by retailers have been uncommon in recent years as the sector fell on hard times, Magee said.

Aaron’s officials have said their business model does well in recessionary times. The company rents-to-own furniture, TVs and other items to consumers who don't have credit. If they complete 12 monthly payments, people can end up owning the item and perhaps rebuild their credit. If not, the customer will return the item or it could be repossessed.

Last year, Aaron’s revenue increased 10 percent to $1.75 billion, profit increased 32 percent to $112.9 million and the company reported an overall increase in shoppers.