Outlook change: Moody's changed Upbound Group, Inc. (NASDAQ:UPBD) outlook from negative to stable on 10‑06‑2026.
Ratings affirmed: Ba2 corporate family rating, Ba2‑PD probability of default rating, Ba2 senior secured first lien term loan rating, B1 senior unsecured notes rating remain unchanged.
Liquidity rating upgraded: speculative‑grade liquidity rating moved from SGL‑3 to SGL‑2.
Rationale: Continued strength in revenue trends and margins, driven by top‑line growth at ACIMA and Brigit and stabilization in Rent‑A‑Center.
Lease charge‑off rates at ACIMA and Rent‑A‑Center improving after tighter underwriting standards.
Free cash flow boosted by profitability, expected to offset one‑time cash outflows from accrued legal expenses and deferred acquisition costs related to the 2025 Brigit purchase.
Debt/EBITDA projected to improve to 2.9× and EBITA/interest coverage to 3.6× by fiscal year‑end 2026, versus 3.6× and 2.5× respectively at FY2025 end.
Ba2 rating supported by solid position in consumer rent‑to‑own industry, target net leverage of 2.0×, good liquidity, and stable customer non‑performance metrics forecast for next 12‑18 months.
Risks: virtual lease‑to‑own volatility, current weak EBITA/interest and free cash flow metrics.
