Conn's Inc. ( CONN - Snapshot Report ) has been buoyed by operating in the stronger Texas economy as the Texas consumer has held up better than most. This Zacks #1 Rank (strong buy) is a value stock with a forward P/E of just 11.4.

Conn's operates 71 stores in Texas, Louisiana and Oklahoma selling home appliances, consumer electronics, lawn and garden products and furniture and mattresses.

Most of its stores are in Texas with 23 stores in the Houston area, 18 in the Dallas/Fort Worth metro area, 8 in San Antonio, and 3 in Austin. It also operates 6 in Louisiana and 3 in Oklahoma.

The company also operates its own finance arm, and finances about 60% of its retail sales.

Conn's Surprised by 55% in the Fiscal Second Quarter

On Sep 7, Conn's reported its fiscal second quarter 2012 results and easily blew by the Zacks Consensus for the 4th quarter in a row. Earnings per share were 17 cents compared to the consensus of 11 cents. It made just 6 cents in the year ago quarter, but on a higher number of shares outstanding.

The quarter, which ended July 31, reflected the national economic slowdown however.

Same store sales fell 12.8% while total revenue declined 13.5% to $184.4 million.

But there was good news on the financing segment as operating income almost doubled to $13 million from $7.3 million a year ago.

The 60+ day delinquency percentage also declined to 6.1%.

Initiated Fiscal Year Guidance

"We are pleased with our progress on improving margins and reducing our cost of capital," said Theodore Wright, Chairman.

"While softer industry conditions resulted in sales slightly below our expectations, the changes made to date position us to drive improved profitability," he added.

Conn's initiated fiscal 2012 guidance between 65 and 75 cents per share.

Zacks Consensus Estimates Jump

The company's initial guidance was much higher than the Zacks Consensus so analysts scrambled to raised estimates.

The fiscal 2012 Zacks Consensus jumped 20 cents to 70 cents in the last month.

This is earnings growth of 290% as the company made just 18 cents in fiscal 2011.

Lots of Value

Conn's has all of the components of a value stock. In addition to a forward P/E under 15, it also has a dirt cheap price-to-book ratio of 0.7. A P/B under 3.0 usually designates value so it is way under that.

The company also sports a price-to-sales ratio of only 0.3. A P/S under 1.0 usually indicates value and Conn's P/S is way under that.

Shares sold off with the rest of the market in the summer but have rallied off of the recent earnings report.

The wildcard for Conn's for the rest of fiscal 2012 is the health of the US economy, specifically the Texas consumer. In the meantime, investors are able to get shares on the cheap while it all plays out.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her at twitter.com/traceyryniec.