Conn's (CONN) Moves 24.3% Higher: Will This Strength Last?
Zacks Investment Research | Apr 01, 2021 04:11AM ET
Conn's (NASDAQ:CONN) shares ended the last trading session 24.3% higher at $19.45. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 9.8% gain over the past four weeks.
Shares of Conn’s moved higher on strong fourth-quarter fiscal 2021 earnings report despite a top line miss. Though same-store sales were hurt by tighter underwriting amid COVID-19, the company more than doubled e-commerce sales in fiscal 2021. Further, it reduced its overall debt position by $416.6 million from the prior-year. Debt as a percentage of portfolio balance was 49% as of Jan 31, 2021. It is poised to benefit from investments in digital and e-commerce platforms as well as expansion of store presence. Also, its focus on improving merchandise and marketing initiatives looks quite encouraging. Its growth initiatives are focused on leveraging best-in-class in-house and third-party credit offerings, which should enhance revenues.
The company reported earnings of $0.85 per share that beat the Zacks Consensus Estimate of $0.15 and marked a substantial growth from $0.17 earned in the prior-year quarter. Total revenues of $367.8 million missed the Zacks Consensus Estimate of $376.7 million.
Price and Consensus
This retailer is expected to post quarterly earnings of $0.23 per share in its upcoming report, which represents a year-over-year change of +112.1%. Revenues are expected to be $327.08 million, down 3.1% from the year-ago quarter.
While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
For Conn's, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on CONN going forward to see if this recent jump can turn into more strength down the road.
The stock currently carries a Zacks Rank 3 (Hold). You can see Zacks Investment Research
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