Why Conn's Inc. Shares Soared

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Conn's, (NASDAQ: CONN  ) were flying today, up as much as 23%, after cruising past estimates in its third-quarter earnings report.

So what: The big-box retailer saw same-store sales jump 35%, driving per-share earnings of $0.71, which beat estimates of $0.64. Overall revenues increased 50.6%, to $310.9 million, easily topping the analyst consensus at $288.6 million. CEO Theodore Wright was optimistic that the strong results would continue, noting that comps rose 32% in November after the previous quarter ended. Conn's also expects to have 20 to 25 new stores open by the end of next year, lifting the total store count to close to 100.

Now what: Full-year guidance was similarly strong as Conn's now expects EPS for the year at $2.75-$2.80, up from its previous projection of $2.50-$2.65. Analysts had expected just $2.60. Furthermore, the company initiated EPS guidance for fiscal 2015 at $3.80-$4.00, also ahead of estimates. Based on that outlook, the retailer has a forward P/E of just 18, which looks like a steal for a company growing this fast. If it can keep up its store expansion and maintain solid same-store sales, shares should continue to move higher.

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