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Conns Upgraded to Strong Buy

Zacks Equity Research

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

Read the Full Research Report on CONN

Read the Full Research Report on BONT

Read the Full Research Report on JJSF

Read the Full Research Report on FLO

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