Conn's, Inc. Earnings: Can the Electronics Retailer Bounce Back?

Conn's stock plunged after last quarter's earnings report. Can the company rebound?

May 30, 2014 at 4:20PM

On Monday Conn's (NASDAQ:CONN) will release its quarterly report, and investors are nervously waiting to see if the electronics and appliance retailer can improve on its poor performance last quarter. Even as big-box electronics giant Best Buy (NYSE:BBY) saw similar disappointment in its holiday quarter results, Conn's faces the challenge of greater competition from Lowe's (NYSE:LOW) and other home-improvement chains cashing in on the recovery in the housing market.

Conn's plays an important niche role in the electronics and appliance retail space, as it aims at a more narrowly focused customer base than either Lowe's or Best Buy. In particular, Conn's benefits greatly from providing in-store financing for many of the products it sells, and when times are good for the low- and middle-income consumers who can't necessarily get credit from outside sources, Conn's can see big earnings growth from serving that market. Yet the strategy also means that Conn's faces credit risk. Let's take an early look at what's been happening with Conn's over the past quarter and what we're likely to see in its report.

Source: Conn's.

Stats on Conn's

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$328.52 million

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Can Conn's earnings pick up steam?
In recent months, investors have had mixed views of Conn's earnings, raising April-quarter estimates by $0.04 per share but cutting full-year projections both this year and next by modest amounts. The stock has bounced back sharply from its losses earlier in the year, rising 35% since late February even though it still trades far below where Conn's started the year.

Conn's fourth-quarter results caused consternation even before the quarterly earnings report officially came out, as the company's stock tanked after giving preliminary guidance that disappointed shareholders. Conn's warned that adjusted earnings per share would come in 15% to 20% below what investors were expecting, and it gave negative guidance for the current fiscal year that fell 8% to 15% below consensus views. Conn's argued that high delinquency rates among its customers were partially to blame for the shortfall, and weak demand signaled that its customer base didn't have the capacity to spend as much as the company would have liked. Those results were consistent with what Best Buy showed in its holiday quarter, especially given all the promotional activity from other players in the electronics space.

By the time Conn's actually made its report, though, investors had gotten more comfortable with the company. Even though earnings and revenue were weak as expected, Conn's was somewhat more upbeat about the creditworthiness of its customers, and shares soared as a result. The ability to extend credit is a key differentiator for Conn's versus Best Buy, Lowe's, and other companies, as Conn's has traditionally served customers who wouldn't be able to get financing elsewhere.

Conn's also stands to gain from continued strength in the housing market. Just as Lowe's and other home-improvement specialists have ridden higher home prices to success, so too does Conn's have the potential to bolster its own revenue as shoppers get more comfortable spending on their homes with appliances, electronics, and other accessories to improve their standards of living.

In the Conn's earnings report, watch to see if the company can sustain its marked-down guidance for the full fiscal year. If its customers' credit continues to get healthier, then Conn's could have more room to run higher.

Top dividend stocks for the next decade
The smartest investors know that dividend stocks simply crush their non-dividend paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.

Click here to add Conn's to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

A Financial Plan on an Index Card

Keeping it simple.

Aug 7, 2015 at 11:26AM

Two years ago, University of Chicago professor Harold Pollack wrote his entire financial plan on an index card.

It blew up. People loved the idea. Financial advice is often intentionally complicated. Obscurity lets advisors charge higher fees. But the most important parts are painfully simple. Here's how Pollack put it:

The card came out of chat I had regarding what I view as the financial industry's basic dilemma: The best investment advice fits on an index card. A commenter asked for the actual index card. Although I was originally speaking in metaphor, I grabbed a pen and one of my daughter's note cards, scribbled this out in maybe three minutes, snapped a picture with my iPhone, and the rest was history.

More advisors and investors caught onto the idea and started writing their own financial plans on a single index card.

I love the exercise, because it makes you think about what's important and forces you to be succinct.

So, here's my index-card financial plan:


Everything else is details. 

Something big just happened

I don't know about you, but I always pay attention when one of the best growth investors in the world gives me a stock tip. Motley Fool co-founder David Gardner (whose growth-stock newsletter was rated #1 in the world by The Wall Street Journal)* and his brother, Motley Fool CEO Tom Gardner, just revealed two brand new stock recommendations moments ago. Together, they've tripled the stock market's return over 12+ years. And while timing isn't everything, the history of Tom and David's stock picks shows that it pays to get in early on their ideas.

Click here to be among the first people to hear about David and Tom's newest stock recommendations.

*"Look Who's on Top Now" appeared in The Wall Street Journal which references Hulbert's rankings of the best performing stock picking newsletters over a 5-year period from 2008-2013.

Compare Brokers