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Why Conn's Stock Rocked 8% Higher Today

By Rich Smith – Sep 1, 2021 at 10:45AM

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Conn's crushed earnings this morning -- but its stock price is still cheap.

What happened

Shares of Conn's (CONN -0.31%) stock popped 8.4% as of 10:15 a.m. EDT Wednesday after the furniture, appliances, and electronics retailer reported estimate-crushing earnings for its fiscal second quarter of 2022.

Analysts had forecast that Conn's would earn a (pro forma) profit of $0.71 per share this past quarter, on sales of $396.7 million, but the company actually reported a profit according to generally accepted accounting principles (GAAP) of $1.22 per share on sales of $418.4 million.  

Simple green arrow going up.

Image source: Getty Images.

So what

Sales for the fiscal second quarter jumped 24% in comparison to last year's Q2, and same-store sales grew 16.4%. Conn's enjoyed especially strong sales growth in its home office segment (sales up 20%), in home appliances (up 26%), and in furniture and mattresses (35%). Consumer electronics sales growth lagged -- but still grew 2%.

Profits shot up 74% from the $0.70 per share that Conn's had earned last year.

Now what

Conn's declined to give specific guidance for the rest of this fiscal year. Still, new CEO Chandra Holt confided that "momentum remains positive across our business reflecting strong consumer demand and ... total retail sales for the first half have increased at the fastest growth rate in seven years."

Accordingly, Conn's predicted that it will close this fiscal year with same-store sales up in the "mid-teens." For a stock trading below seven times trailing earnings, I have to say -- that sounds pretty good.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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