Image source: Conn's.  

If it surprised you to see shares of Conn's (NASDAQ:CONN) soar 24% two weeks ago, after the company posted problematic quarterly results, then it may be an even bigger shock that the stock rocketed another 19% this past week on no news at all. We're talking about a mind-numbing 48% pop in two weeks for a stock that kicked off the rally with a dubious financial report. 

There were no major developments out of Conn's last week. The only analyst news involving Conn's really had more bearing on Tempur Sealy (NYSE:TPX) than on Conn's. 

Piper Jaffray analyst Peter Keith pushed out a bullish note on Tempur Sealy on Wednesday, after learning that it had become the exclusive distributor of mattresses to Conn's. Tempur Sealy is replacing Serta at Conn's as its mattress supplier of choice, a move that should result in $20 million to $22 million in annual wholesale revenue for Tempur Sealy.

This may not seem like a big deal for those who view Conn's as an appliance and consumer-electronics retailer, but a whopping 35% of product sales at the retailer came from its furniture and mattress category in its latest quarter. Conn's sees that category growing to 45%, making this a pretty sweet deal for Tempur Sealy. This could also be a pretty sweet deal for Conn's. There are higher margins to be had in furniture pieces and mattresses than in its other product categories. However, the shift to Tempur Sealy won't make much of a difference at Conn's itself.

Wrath of Conn's

Now that the stock has moved higher in seven of the past eight trading days, it's worth circling back to the seemingly iffy quarterly report that triggered the rally earlier this month. Comparable-store sales fell across all four of its product categories. Comps clocked in 5.1% lower than a year earlier for the fiscal second quarter, or a 4.6% decline if we eliminate the video-game products, digital cameras, and select tablets that Conn's chose to discontinue. 

Conn's checked in with an adjusted loss of $0.04 a share. Analysts were holding out for a deeper deficit, but this is the first time the retailer has posted a loss during its fiscal second quarter in five years. It bears pointing out that Conn's fell short of Wall Street's top-line expectations.   

There's also the thorny debt situation at Conn's. Its provision for bad debts has moved higher over the past year, and Conn's sees that provision covering between 14.25% to 15.25% of its average total customer portfolio balance. The retailer did boast about winning regulatory approval to charge higher rates on its borrowed big-ticket purchases in Texas, but high rates are only worth applauding if unreliable borrowers are actually paying them.

The stock is still trading 57% lower year to date, correctly framing the recent rally. It's been a refreshing surge these past two weeks, but the stock still has problems -- and a long way to go before it's truly back.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.