Conns Upgraded to Strong Buy - Analyst Blog


On Jun 8, 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 roughly 80%.

Why the Upgrade?

Conn's has been witnessing rising earnings estimates owing to impressive first-quarter fiscal 2014 results, on the back of strong comparable-store sales momentum, the pricing power, margin improvement and unit remodeling.

The company declared strong results on Jun 6, 2013, wherein earnings of 61 cents a share came ahead of the Zacks Consensus Estimate of 56 cents, and surged 74.3% from 35 cents earned in the year-ago quarter.

This durable consumer goods retailer outperformed the Zacks Consensus Estimate in 5 of the 6 last quarters and met in one, resulting in an average beat of 12.6%. The long-term expected earnings growth rate for the stock is 17.5%.

Conn's total revenue grew 25% to $251.1 million in the quarter from $200.9 million in the year-ago period, and came ahead of the Zacks Consensus Estimate of $241 million. Comparable-store sales for the quarter climbed 16.5%.                                   

Revenue from the retail segment increased 25.5% to $209.8 million, whereas retail gross margin expanded 660 basis points to 40.3%. On the other hand, credit card segment revenue soared 22.6% to $41.3 million.

Buoyed by healthy results, management now projects fiscal 2014 earnings between $2.50 and $2.65 with expected comparable-store sales growth of 8% to 13%.

The Zacks Consensus Estimate for fiscal 2014 rose 5.6% to $2.63, whereas for fiscal 2015 it jumped 9.6% to $3.42 per share in the last 7 days.  

Other Stocks to Consider

The stocks worth considering in the non-food retail, wholesale sector include Flowers Foods, Inc. ( FLO ) and Bon-Ton Stores Inc. ( BONT ), both of which hold a Zacks Rank #1 (Strong Buy), and J&J Snack Foods Corp. ( JJSF ), which carries a Zacks Rank #2 (Buy). These stocks are expected to continue with their upbeat performances.

BON-TON STORES (BONT): Get Free Report

CONNS INC (CONN): Free Stock Analysis Report

FLOWERS FOODS (FLO): Free Stock Analysis Report

J&J SNACK FOODS (JJSF): Free Stock Analysis Report

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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: BONT , CONN , FLO , JJSF

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