Rent-to-own chain Aaron's increases annual profit by 32%

On Tuesday, Aaron's announced fourth-quarter revenue increased 10 percent to $446.3 million. Diluted earnings per share were 46 cents on profit of $25 million.

The results were on the high end of the company's guidance and three cents more than what Wall Street expected.

For the year, Aaron's revenue increased 10 percent to $1.75 billion. Profit increased 32 percent to $112.9 million, while diluted earnings per share were $2.07.

Robin Loudermilk, Aaron's president and CEO, called the company's results "outstanding" and said the future "remains optimistic."

Aaron's specializes in doling out furniture, TVs and other gadgets to consumers who don't have credit. Consumers, if they complete 12 monthly payments, could end up owning the flat screen TV or laptop computer they paid for and perhaps rebuilding their credit.

If not, the customer will return the item or it could get repossessed.

Aaron's has more than 1,700 company- and franchised-operated stores in 48 states and Canada.

Magee, the analyst, wrote in a report last Friday that Aaron's "sweet spot" is the larger LCD television sets, such as 46-inch TVs, the company now rents for $99 a month.

Magee expects Aaron's will get a "tailwind from the tax refund season, given the higher-end customer that we believe it has attracted during the recession."

Magee noted that Aaron's stock – which closed Tuesday at $30.48 – has been up this year. ByTuesday's close, the stock had posted gains of 9.6 percent for the year.

The company issued guidance for 2010 earnings and believes revenue will rise 5.7 percent to $1.85 billion. The company also expects to increase its number of stores by 5 to 9 percent.