Stephens analyst Vincent Caintic noted that Aaron's (AAN) won of the subprime portion of Signet Jewelers' (SIG) outsourcing of its credit portfolio, with Alliance Data (ADS) winning the prime portfolio, and he thinks there may be more upside to Aaron's revenues from this deal than Signet's financials suggest. Based on his belief that subprime consumer lenders are outperforming prime lenders, he suggests a pair trade of Aaron's long against Synchrony (SYF). Caintic has an Overweight rating and $38 price target on Aaron's shares.

Says receivables growth consistent with expectations, payment rate slightly lower than expectations and purchase volume below expectations. Says net interest income growth higher than expectations due to lower than expected payment rate and lower than expected deposit betas. Says credit, RSA and other expense largely in-line with expectations. Says expects typical seasonality in purchase volume, loan receivables, net interest income and in credit performance. Says expects net charge-offs to peak mid-year. Says expects reserve coverage at year-end to be lower than '23 year-end rate. Says expects RSA to align to program performance and function as designed. Comments taken from Q1 earnings conference call.

Reports Q1 revenue $4.8B, consensus $4.45B. Reports Q1 CET1 capital ratio 12.6%. Reports Q1 net charge-offs 6.31%. "Synchrony's first quarter performance highlights the resiliency of our business model and focus on delivering sustainable, strong results for each of our stakeholders," said Brian Doubles, Synchrony's President and Chief Executive Officer.