Conn's Upgraded to Strong Buy - Analyst Blog

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On Apr 6, 2013, Zacks Investment Research upgraded Conn's, Inc. ( CONN ) to a Zacks Rank #1 (Strong Buy). Shares of this specialty retailer of home appliances, furniture, mattresses and consumer electronics have amassed an impressive year-to-date return of 43.7%. 

Why the Upgrade?

Conn's has been witnessing rising earnings estimates owing to impressive fourth-quarter fiscal 2013 results, on the back of strong comparable-store sales momentum, the pricing power, margin improvement and unit remodeling. The company declared strong results on Apr 3, 2013, wherein earnings of 54 cents a share came in line with the Zacks Consensus Estimate but surged 58.8% from 34 cents earned in the year-ago quarter.

This durable consumer goods retailer has outperformed the Zacks Consensus Estimate in 4 out of last 5 quarters and met in one, resulting in an average beat of 13.4%. The long-term expected earnings growth rate for the stock is 15%.

Conn's total revenue grew 10.4% to $250.3 million in the quarter from $226.7 million in the year-ago period, and came ahead of the Zacks Consensus Estimate of $249 million. Comparable-store sales for the quarter climbed 7%.                                   

Revenue from the retail segment increased 9.7% to $208.7 million, whereas retail gross margin expanded 720 basis points to 36.9%. On the other hand, credit card segment revenue soared 14.5% to $41.6 million.

Buoyed by healthy results, management now projects fiscal 2014 earnings between $2.40 and $2.50 with expected comparable-store sales growth of 3% to 8%.

The Zacks Consensus Estimates for the first and second quarters of fiscal 2014 rose 11.9% and 8.2% to 47 cents and 53 cents, respectively, in the last 7 days. For fiscal 2014, the Zacks Consensus Estimate rose 17.8% to $2.45 per share over the same time frame.

Other Stocks to Consider

The stocks worth considering in the non-food retail, wholesale sector include Lumber Liquidators Holdings Inc. ( LL ), Macy's, Inc. ( M ) and Cabela's Inc. ( CAB ), all of which carry a Zacks Rank #1 (Strong Buy).The stocks are expected to continue with their upbeat performances.



CABELAS INC (CAB): Free Stock Analysis Report

CONNS INC (CONN): Free Stock Analysis Report

LUMBER LIQUIDAT (LL): Free Stock Analysis Report

MACYS INC (M): Free Stock Analysis Report

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Zacks Investment Research



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: CAB , CONN , LL , M

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