Please ensure Javascript is enabled for purposes of website accessibility

Shares of Conn's Bounce 16% After 2nd Consecutive Profitable Quarter

By Daniel Miller - Dec 7, 2017 at 1:29PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Shares of Conn's are up Thursday despite some comparable store sales weakness thanks to the company beating analysts' estimates on the top and bottom line.

What happened?

Shares of Conn's Inc (CONN -0.12%), a specialty retailer selling household furniture, appliances, and accessories, are bouncing 16% higher Thursday as of 11 a.m. EST after the company announced strong third-quarter results for fiscal year 2018.

So what

Conn's posted total revenue of $373.2 million during the third quarter, which managed to top the estimates of analysts surveyed by Zacks that called for $362.2 million. The strong top-line result filtered to the bottom line, with adjusted earnings per share (EPS) checking in at $0.18, compared to estimates of a more modest $0.04 adjusted EPS. More importantly, the third quarter represented the second consecutive quarter of profitability, and the company's credit segment recorded its highest spread in 11 quarters.

Woman looking at dresser furniture

Image source: Getty Imagesc

"Retail performance remains solid and Conn's achieved record third quarter retail gross margins, which helped produce another quarter of strong retail operating income. With improving credit trends, we are increasingly confident that the investments we have made in the credit platform can support profitable growth..." said Norm Miller, Conn's chairman and CEO, in a press release.

Now what

Management plans to open five to nine new stores during fiscal year 2019, which should help offset some of the comparable store weakness felt during the third quarter. However, if the company continues to benefit from a widening credit spread and improving retail gross margins, more quarters of profitability should be achievable. That's great news for investors who hope the stock can hold its 191% gain in price over the past 12 months. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Conn's, Inc. Stock Quote
Conn's, Inc.
CONN
$8.01 (-0.12%) $0.01

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
311%
 
S&P 500 Returns
110%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/01/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.