PROG Holdings (PRG) AI Stock Analysis

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PROG Holdings

(NYSE:PRG)

Rating:75Outperform

Price Target:

$33.00

▲(13.44%Upside)

PROG Holdings presents a solid investment opportunity with a strong financial foundation and attractive valuation. Despite technical challenges and macroeconomic headwinds, the company's strategic initiatives and positive earnings performance enhance its investment appeal. The commitment to dividends also supports its attractiveness for income-focused investors.

Positive Factors

Earnings

PRG reported 1Q EPS of $0.90, above our estimate of $0.87 and consensus of $0.83.

Revenue Growth

The Four business continues to grow fast, with revenue approaching about one-fifth of public peer Sezzle's.

Negative Factors

Financial Guidance

Management lowered 2025 guidance by a considerable amount, due to macro deterioration leading to lower-than-expected GMV and leased assets.

Guidance Impact

Initial 2025 guidance is below estimate and consensus, reflecting the impact of Big Lots bankruptcy.

PROG Holdings (PRG) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$1.17B

Dividend Yield1.72%

Average Volume (3M)473.88K

Price to Earnings (P/E)5.9

Beta (1Y)1.08

Revenue Growth4.62%

EPS Growth101.14%

CountryUS

Employees1,403

SectorIndustrials

Sector Strength92

IndustryRental & Leasing Services

Share Statistics

EPS (TTM)0.90

Shares Outstanding40,354,010

10 Day Avg. Volume362,760

30 Day Avg. Volume473,881

Financial Highlights & Ratios

PEG Ratio0.70

Price to Book (P/B)1.69

Price to Sales (P/S)0.00

P/FCF Ratio5.34

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$36.60

Price Target Upside25.82% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering5

PROG Holdings Business Overview & Revenue Model

Company DescriptionPROG Holdings, Inc. (PRG) is a leading provider of lease-purchase solutions in the United States. The company primarily operates through its Progressive Leasing segment, which offers lease-to-own transactions for consumers who may not qualify for traditional financing options. PROG Holdings partners with various retailers to provide consumers with the ability to obtain merchandise such as furniture, electronics, appliances, and other durable goods through affordable leasing agreements. The company's services are designed to be flexible and accessible, catering to a broad range of customer needs.

How the Company Makes MoneyPROG Holdings makes money primarily through its lease-to-own business model, which involves entering into agreements with consumers who lease merchandise from partner retailers. The company generates revenue from the lease payments made by customers over the term of the lease agreement. These payments typically include an initial payment at the start of the lease followed by regular periodic payments. Additionally, PROG Holdings benefits from partnerships with a wide network of retailers, which helps expand its customer base and increase transaction volumes. The company also earns revenue from fees associated with leasing agreements, such as late fees or early purchase option fees, contributing to its overall earnings.

PROG Holdings Earnings Call Summary

Earnings Call Date:Apr 23, 2025

(Q1-2025)

% Change Since: 9.86%|

Next Earnings Date:Jul 23, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mix of positive and negative elements. The company reported strong revenue growth, exceeded earnings expectations, and showed growth in its BNPL platform. However, challenges such as a decline in GMV, the impact of a major retail partner's bankruptcy, and a challenging macro environment indicate significant headwinds.

Q1-2025 Updates

Positive Updates

Strong Revenue Growth

Consolidated revenue for Q1 2025 was $684.1 million, representing a 6.6% increase year over year.

Exceeded Earnings Expectations

Adjusted EBITDA was $70.3 million, and non-GAAP EPS was $0.90, both exceeding the high end of the company's outlook.

Growth in BNPL Platform

Four Technologies reported triple-digit GMV growth for the sixth consecutive quarter and achieved its first quarter of positive adjusted EBITDA.

Healthy Lease Portfolio

Lease portfolio balance was up 6.1% year over year, and Q1 write-offs were at 7.4%, within the company's targeted annual range of 6% to 8%.

Increase in Active Door Count

The active door count expanded by nearly 5% year over year, excluding the impact of Big Lots.

Negative Updates

Decline in GMV

Progressive Leasing's GMV for the quarter was down 4% compared to the same period last year, impacted by the bankruptcy of a large retail partner and a challenging retail environment.

Challenging Macro Environment

Ongoing economic volatility, evolving trade policy, and inflation are creating additional pressure on both direct-to-consumer and retail partner channels.

Impact of Retail Partner Bankruptcy

The bankruptcy of a large retail partner resulted in a mid-thirty million dollar GMV headwind in Q1 alone.

Continued Economic Uncertainty

The company revised its full-year 2025 outlook due to increased macro uncertainty and a decline in consumer confidence.

Company Guidance

During the PROG Holdings First Quarter 2025 Earnings Conference Call, the company provided guidance indicating a revised full-year revenue outlook in the range of $2.425 to $2.5 billion, adjusted EBITDA between $245 to $265 million, and non-GAAP EPS from $2.90 to $3.30. Despite macroeconomic challenges, the first quarter saw consolidated revenue increase by 6.6% year-over-year to $684.1 million, driven by a larger lease portfolio and higher ninety-day purchase activity. Adjusted EBITDA was reported at $70.3 million, with non-GAAP EPS at $0.90, both exceeding expectations. The lease portfolio balance was up 6.1% year-over-year as of December 31, 2024, reflecting a healthy performance with write-offs at 7.4%, within the targeted 6% to 8% annual range. The company highlighted strong growth at Four Technologies, its BNPL platform, which achieved its first quarter of positive adjusted EBITDA, and emphasized continued strategic investments in marketing and technology to support long-term growth.

PROG Holdings Financial Statement Overview

Summary

PROG Holdings maintains a strong financial position with effective cost management and operational efficiency. While profitability metrics are solid, revenue growth has shown variability, presenting a challenge. The balance sheet is robust, with a strong equity position and no debt, reducing financial risk. Cash flow management is stable but could be optimized for better free cash flow generation. Overall, the company's financial health is commendable, with opportunities for growth and improvement.

Income Statement

Positive

The income statement shows a mixed performance with some strengths and weaknesses. The gross profit margin is strong at 56.5% for TTM, indicating efficient cost management. However, revenue growth has been inconsistent, with a decline in recent periods. The net profit margin is moderate at 11.5% for TTM, showing profitability but with room for improvement. The EBIT margin of 12.1% and EBITDA margin of 55.7% for TTM are healthy, reflecting operational efficiency.

Balance Sheet

Positive

The balance sheet presents a solid financial position with some notable strengths. The company has no debt in the TTM period, indicating strong financial stability and reduced risk. The equity ratio is a healthy 44.5%, suggesting a balanced capital structure. Return on equity is reasonable at 32.1% for TTM, showcasing effective utilization of equity. Overall, the balance sheet reflects financial prudence and stability.

Cash Flow

Positive

Cash flow analysis reveals moderate performance. Free cash flow growth is positive, though volatile. The operating cash flow to net income ratio of 1.01 indicates efficient cash conversion. However, the free cash flow to net income ratio is lower at 0.97, suggesting some challenges in translating profits into free cash flow. The cash flow position is stable but could benefit from improved consistency.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
2.51B	2.46B	2.41B	2.60B	2.68B	2.48B
	Gross Profit
1.25B	815.42M	831.96M	807.92M	823.68M	607.58M
	EBIT
221.05M	194.90M	225.63M	1.92B	333.53M	271.76M
	EBITDA
1.49B	194.90M	1.83B	185.65M	333.53M	271.76M
	Net Income Common Stockholders
210.00M	197.25M	138.84M	98.71M	243.56M	233.63M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
213.30M	95.66M	155.42M	131.88M	170.16M	36.65M
	Total Assets
1.47B	1.51B	1.49B	1.49B	1.62B	1.32B
	Total Debt
604.05M	655.06M	608.11M	612.09M	615.06M	79.52M
	Net Debt
390.75M	559.40M	452.70M	480.21M	444.90M	42.87M
	Total Liabilities
815.47M	863.49M	899.92M	921.45M	942.35M	331.27M
	Stockholders Equity
654.45M	650.28M	591.33M	570.46M	679.41M	986.14M
Cash Flow		Free Cash Flow
204.54M	130.21M	194.62M	232.81M	236.41M	391.62M
	Operating Cash Flow
212.72M	138.53M	204.24M	242.48M	245.96M	455.96M
	Investing Cash Flow
-79.67M	-79.17M	-38.83M	-53.53M	-82.17M	-114.53M
	Financing Cash Flow
-172.58M	-119.12M	-141.87M	-227.22M	-30.28M	-362.55M

PROG Holdings Technical Analysis

Technical Analysis Sentiment

Positive

Last Price29.09

Price Trends

50DMA

27.23

Positive

100DMA

30.94

Negative

200DMA

38.27

Negative

Market Momentum

MACD

0.44

Positive

RSI

56.42

Neutral

STOCH

68.63

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PRG, the sentiment is Positive. The current price of 29.09 is above the 20-day moving average (MA) of 28.98, above the 50-day MA of 27.23, and below the 200-day MA of 38.27, indicating a neutral trend. The MACD of 0.44 indicates Positive momentum. The RSI at 56.42 is Neutral, neither overbought nor oversold. The STOCH value of 68.63 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for PRG.

PROG Holdings Risk Analysis

PROG Holdings disclosed 47 risk factors in its most recent earnings report. PROG Holdings reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 3 New Risks

We may improve our products and services in ways that forego short-term gains. Q4, 2024

Our efforts to modernize and enhance certain enterprise-wide information management systems and technologies could adversely impact our businesses and operations. Q4, 2024

Any significant disruption in our vendors' information technology systems, or disruption in the information our businesses rely on in their lease and loan decisioning, may materially and adversely affect several aspects of our performance. Q4, 2024

PROG Holdings Peers Comparison

Overall Rating

UnderperformOutperform

Sector (66)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
GRC	76 Outperform	$978.41M	22.00	12.06%	1.98%	0.92%	21.96%
BBSI	75 Outperform	$1.09B	21.66	25.86%	0.76%	8.41%	7.93%
PRG	75 Outperform	$1.17B	5.95	33.88%	1.72%	4.62%	101.14%
WLFC	69 Neutral	$989.89M	9.82	18.32%	0.69%	32.55%	70.32%
APOG	68 Neutral	$848.04M	10.12	17.74%	2.59%	-3.95%	-14.56%
HLIO	67 Neutral	$1.08B	29.03	4.27%	1.11%	-5.39%	12.14%
Sector *	66 Neutral	$4.50B	12.28	5.32%	248.52%	4.13%	-12.36%

* Industrials Sector Average

Performance Comparison

PRG

PROG Holdings

29.09

-6.18

-17.52%

APOG

Apogee

39.31

-21.46

-35.31%

BBSI

Barrett Business Services

42.29

9.53

29.09%

GRC

Gorman-Rupp Company

37.21

1.67

4.70%

HLIO

Helios Technologies

32.34

-14.94

-31.60%

WLFC

Willis Lease Finance

145.50

83.43

134.41%

PROG Holdings Corporate Events

Executive/Board ChangesShareholder MeetingsDividends

PROG Holdings Declares Quarterly Cash Dividend

Positive

May 8, 2025

On May 7, 2025, PROG Holdings held its annual meeting of shareholders, where the election of directors and approval of executive compensation were key actions taken. Additionally, the company declared a quarterly cash dividend of $0.13 per share, payable on June 3, 2025, reflecting its commitment to shareholder returns.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.