) has watched every analyst estimate for the current fiscal year
advance in the past seven days, following a solid second quarter
report that included a raised outlook. Shares of this durable
consumer goods retailer are up 108.9% year-to-date.
Some of the bullish traits for this Zacks #1 Rank (Strong Buy)
include strong same-store sales momentum, constant share gains in a
tricky appliance market, its ability to charge higher price points
compared to peers, strong margin improvement, unit remodeling and
an increase in its credit portfolio balance.
Raised Fiscal 2013 Outlook
On September 5, Conns posted adjusted earnings per share of 36
cents for the second quarter of fiscal 2013, beating the Zacks
Consensus Estimate by a penny. Earnings improved substantially from
the year-ago level of 18 cents.
Net revenue increased 10.9% year over year to $207.4 million,
outperforming the Zacks Consensus Estimate of $203.0 million. Same
store sales increased 21.5% during the fiscal second quarter.
Conns raised its diluted earnings per share guidance for fiscal
2013 to between $1.40 and $1.50 per share from the range of $1.30
to $1.40 projected earlier. Growth in same stores sales are
expected at 10% to 15%, while the company previously guided mid- to
high-single digit growth. It also plans to open as many as five new
stores for the full-year.
Guidance Drives Earnings Estimates
Earnings estimates for fiscal 2013 rose 4.3% to $1.47 per share in
the last 7 days as all 6 estimates were revised higher. This
represents potential for year-over-year growth of 113.3%. The Zacks
Consensus Estimate for fiscal 2014 is up 6.4% to $1.83 per share
over the same time frame as 5 of 6 estimates were revised upward,
reflecting year-over-year growth of 24.6%.
Premium Valuation Justified
Conns currently trades at a forward P/E of 16.54x, implying a 91%
premium to the peer group average of 8.66x. The company has a PEG
ratio of 1.3 times. On a price-to-book basis, the company is at a
premium of 86.5% with a 2.07 multiple compared with the peer group
multiple of 1.11.
We believe that the premium is warranted given a higher long-term
earnings growth rate of 13.0% compared with the industry average of
The sturdy escalation in Conns' share price, recording a one-year
return of 204.3%, signifies the company's favorable position as it
is gaining from its earnings and sales momentum, in addition to
expanding its credit portfolio.
Moreover, shares have continually traded above the 200-day moving
average since September 6, 2011. Barring occasional pullbacks, the
stock has also traded above its 50-day moving average since October
5, 2011. Additionally, the company has outperformed the S&P 500
Index since May 25, 2011.
Founded in 1890 and headquartered in Beaumont, Texas, Conns is a
retailer of durable consumer products in the United States. The
company deals in home appliances, furniture and mattresses,
consumer electronics and home office products. Additionally, the
company offers a variety of products on a seasonal basis, including
lawn and garden equipment. The company also provides flexible
in-house credit options for its customers, in addition to
third-party financing programs and third-party rent-to-own payment
plans. Conns has a market cap of 788.7 million.
CONNS INC (CONN): Free Stock Analysis Report
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