Markets

Conn’s reports Q2 numbers September 4

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What's Happening

Home goods retailer Conn's Inc. ( CONN ) will report second-quarter earnings before the market opens September 4. The consensus calls for earnings of $0.41 per share, up from $0.26 during the same period last year. CONN is up 14.1% year to date.

Technical Analysis

CONN was recently trading at $41 which is the stock's 12-month high, $24.45 above its 12-month low. InvestorsObserver's Stock Score Report gives CONN a 96 long-term technical score and a 99 short-term technical score. The stock has recent support above $38 and recent resistance below $40.25. Of the 5 analysts who cover the stock 5 rate it Strong Buy, 0 rate it Buy, 0 rate it Hold, 0 rate it Sell, and 0 rate it Strong Sell, CONN gets a score of 96 from InvestorsObserver's Stock Score Report.

Analyst's Thoughts

Most home goods retailers have been showing strength over the last year on the back of a strong housing market. CONN, Home Depot ( HD ) and Lowe's ( LOW ) have all performed well. HD and LOW have both reported their quarterly results already, with both companies posting better than expected earnings and sales. While CONN is not in direct competition with the two companies, the fact that HD and LOW both continue to show strength is a very positive indicator for all housing-related retailers. The market expects a big earnings beat for CONN, with a whisper number of $0.47 versus the consensus $0.41. CONN is currently trading at its 52-week high, but its forward P/E is just 13.0, so its valuation should not prevent the stock from building on its recent gains as long as the quarterly report does not disappoint. What is important to pay attention to though is that with the street having such a bullish whisper number for the quarter, CONN will need to not only top estimates, but show earnings well above the consensus for shares to break out to new highs following the report. Analysts have a $43.20 average price target on the stock.

Stock Only Trade

Bullish Trade

If you want a bullish hedged trade on the stock, consider a 10/19/18 29/33 bull-put credit spread for a $0.50 credit. That's a potential 14.3% return (106% annualized*) and the stock would have to fall 20.7% to cause a problem.

Bearish Trade

If you want to take a bearish stance on the stock at this time, consider an 10/19/18 45/50 bear-call credit spread for a $0.60 credit. That's a potential 13.6% return (102% annualized*) and the stock would have to rise 11.5% to cause a problem.

Covered Call Trade

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

Originally published on InvestorsObserver.com


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

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