Conns Inc. ( CONN - Snapshot Report ) raised its fiscal 2013 outlook during its strong fiscal third quarter report; its fourth straight with a positive EPS surprise. An encouraging guidance, strong estimate revisions and a sturdy long-term earnings growth projection of 15.0% make this Zacks #1 Rank (Strong Buy) specialty retailer of durable consumer products an attractive pick for investors seeking growth.

Strong Q3, Guidance Raised

On December 3, Conns posted adjusted earnings per share of 38 cents for its fiscal third quarter, beating the Zacks Consensus Estimate by 40.7%. Earnings improved substantially from the year-ago level of 2 cents.

Net revenue increased 10.6% year over year to $206.4 million, driven by a gain of 8.2% in Retail segment sales and a 22.6% increase in Credit segment sales. Same store sales increased 12.6%.

Retail gross margin was 35.5% in the quarter, up 1020 basis points year over year. Improved margins across all product categories, combined with growth in higher-margin furniture and mattress sales, largely drove retail gross margin in the quarter.

Conns raised its diluted earnings per share guidance for fiscal 2013 to between $1.55 and $1.60 from the range of $1.40 to $1.50 per share projected earlier. Growth in same stores sales are expected at 13% to 16%, while the company previously guided 10% – 15% growth. It also plans to open as many as five new stores for the full year.

Additionally, the company introduced its guidance for fiscal 2014, projecting earnings per share between $2.05 and $2.15, with same store sales increasing 0% to 5%. New store openings for fiscal 2014 are expected at 10 to 12 stores.

Earnings Guidance Drives Estimates

Earnings estimates have been trending higher over the past 30 days on account of its raised fiscal 2013 forecasts as well as fresh fiscal 2014 projections. The Zacks Consensus Estimate for fiscal 2013 rose 4.6% to $1.59 per share, as 3 of 4 estimates were revised higher. This represents year-over-year growth of 130.4%.

The Zacks Consensus Estimate for fiscal 2014 advanced 8.4% to $2.06 per share over the same time frame, as 6 of 8 estimates advanced, reflecting a year-over-year increase of 29.5%.

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Shares of Conn’s have returned 160% year to date, indicating that the company continues to gain from its earnings and sales momentum.

Moreover, shares have continually traded above the 200-day moving average since the beginning of calendar year 2012. The stock is also trading above its 50-day moving average since July 25, 2012, and has outperformed the S&P 500 Index since February 6, 2012.

Conn’s is a retailer of durable consumer products in the United States. The company deals in home appliances, furniture and mattress, consumer electronics and home office products. Additionally, the company offers a variety of products on a seasonal basis, including lawn and garden equipment. The company also provides flexible in-house credit options for its customers, alongside third-party financing programs and third-party rent-to-own payment plans. Conn's has a market cap of 990.5 million.

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