On Jun 8, 2013, Zacks Investment Research upgraded Conn’s, Inc. (CONN - Snapshot Report) 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 - Snapshot Report) and Bon-Ton Stores Inc. (BONT - Snapshot Report), both of which hold a Zacks Rank #1 (Strong Buy), and J&J Snack Foods Corp. (JJSF - Snapshot Report), which carries a Zacks Rank #2 (Buy). These stocks are expected to continue with their upbeat performances.