Zacks Investment Research upgraded
) to a Zacks Rank #1 (Strong Buy) on Jul 3 based on strong first
quarter earnings due to which analyst estimates have been on the
Why the Upgrade?
The current optimism surrounding the stock is mainly
attributable to better-than-expected first quarter results and
impressive fiscal 2015 outlook. Consequently, the Zacks Consensus
Estimate for fiscal 2015 has increased 2.2% to $3.65 per share in
the past 30 days.
Conn's first quarter adjusted earnings of 80 cents per share
were significantly higher than the year-ago quarter earnings of 61
cents and it also exceeded the Zacks Consensus Estimate of 73 cents
per share. In fact, in the last ten quarters, the company beat the
consensus estimates seven times, missed it on two occasions and
reported in line results in one quarter. The strong earnings growth
was driven by higher top-line growth boosted by strong consumer
demand for home appliances, furniture and mattresses as well as
Conn's net sales of $335.4 million beat the Zacks Consensus
Estimate of $325 million by 3.2% and climbed 33.6% year over year.
Sales were driven by a gain of 32.6% in the Retail segment and a
38.9% increase in the Credit segment. Same store sales increased
15.6% primarily benefiting from the company's focus on expanding
product offerings and store base.
Further, the company remains optimistic about achieving its
profit target for fiscal 2015 and therefore, during earnings call,
reiterated its earnings guidance range. It continues to expect
earnings in the range of $3.40-$3.70 per share in the fiscal while
diluted share outstanding will be approximately 37.4 million.
We believe that Conn's will continue to perform well, given its
growth initiatives, which include expansion of its store base and
incorporation of technological advancements to better serve its
patrons. The company leverages a wide network of stores to
effectively penetrate into its target markets, which consequently
enable it to generate healthy sales and gain market share.
Other Stocks to Consider
Other better-ranked stocks in the retail sector include
Restoration Hardware Holdings, Inc.
). All these stocks carry a Zacks Rank #2 (Buy).
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