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Will Conn's (CONN) Strong Retail Business Aid Q4 Earnings?

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Conn's, Inc. (CONN - Free Report) is slated to release fourth-quarter fiscal 2018 results on Apr 5. The company has posted earnings beat for six straight quarters now, with an impressive trailing four-quarter average of 493.2%.

The Zacks Consensus Estimate for the quarter under review is pegged at 49 cents, which remained stable in the last 30 days. However, the estimate reflects significant growth from 5 cents in the year-ago quarter.

Conn's, Inc. Price, Consensus and EPS Surprise

Conn's, Inc. Price, Consensus and EPS Surprise | Conn's, Inc. Quote

 

Factors at Play

Conn's has been gaining from its unique retail business model, which has also helped the company to deliver solid retail gross margins in recent quarters. The expansion in the segment’s margins can be attributed to favorable mix across product categories as well as lower warehouse, delivery, and transportation expenses.

In addition, the company remains focused on undertaking strategic initiatives to solidify its credit division. Also, management is optimistic about growth in the credit platform on the improved credit trends. Meanwhile, the company’s store-expansion efforts are impressive as it intends to introduce five to nine new stores, thus leveraging the current infrastructure. Moreover, Conn's transformation plan bodes well, positioning it for sustainable growth in future.

However, Conn’s top line remains soft, as it has lagged sales estimates in four of the last six quarters. Furthermore, same store sales are expected to decline in mid-single digits in the fourth quarter of fiscal 2018. Analysts polled by Zacks expect revenues of roughly $428.7 million, down nearly 1% from the year-ago quarter.

Given the mixed factors, let’s wait and see if Conn’s can maintain its positive earnings streak in the to-be-reported quarter as well.

What Does the Zacks Model Show?

Our proven model does not show that Conn's is likely to beat on earnings estimates this quarter. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Conn's carries a Zacks Rank #3 (Hold), which increases the predictive power of ESP. However, the company has an Earnings ESP of 0.00%, making surprise prediction difficult.

Stocks With Favorable Combination

Here are some companies you may want to consider as our model shows that these have the right combination of elements to deliver an earnings beat:

Post Holdings, Inc. (POST - Free Report) has an Earnings ESP of +2.40% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Yum China Holdings, Inc. (YUMC - Free Report) has an Earnings ESP of +2.22% and a Zacks Rank of 3.

The TJX Companies, Inc. (TJX - Free Report) has an Earnings ESP of +0.40% and a Zacks Rank #3.

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