There's a lot of momentum for Conn's (NASDAQ:CONN) these days. The retailer of furniture, mattresses, and consumer electronics saw its shares hit another fresh 52-week high on Friday. The stock soared nearly 18% last week, making it one of the market's biggest winners, and has surged 184% since bottoming out last summer, more than doubling in April alone. 

There have been some encouraging developments and bullish analyst notes spurring the stock's revival. Last week's catalyst was Rick Nelson at Stephens, who boosted his price target on the shares from $15 to $25. He thinks we're in the early stages of a turnaround and that Conn's has an easy path to post improving comps as it lowers its losses and borrowing costs. Nelson's call earlier this year to tap Conn's as his "Best Idea for 2017" just keeps looking smarter with every uptick.

But let's not get cocky. A big test comes on Tuesday, when the 113-store chain posts its fiscal first-quarter results, and it will have to justify its recent gains.

Conn's Home Plus exterior shot.

Image source: Conn's.

Prose and Conn's

Wall Street pros aren't holding out for much in Tuesday morning's numbers. They see net sales clocking in at $358.7 million, 8% below last year's level. That would be the retailer's steepest top-line decline since the summer of 2011. The market's also holding out for more red ink, something it's done for nearly two years outside of the two holiday-containing quarters. However, the $0.22-per-share deficit that analysts are targeting is better than the $0.31 loss Conn's posted a year earlier.

This may not seem like the results you'd expect out of a stock that's nearly tripled since last summer, but there's more to this story than the superficial results suggest. Comps should once again be negative, but the reasons for the store-level sales decline include scaling back on less profitable product offerings and tightening up financing standards. The end result is that margins are improving, and the delinquencies from borrowers who were once threatening the company's viability are starting to stabilize. 

Wall Street's warming up to the leaner Conn's, especially since it received regulatory clearance to offer direct loans in Texas and Louisiana, giving it the wiggle room to command higher interest rates out of its shoppers with weaker credit scores. 

Analysts now see a return to profitability this fiscal year. Getting Conn's back into the black on an annual basis may not be enough to justify the stock's push to new highs heading into Tuesday's report, but another quarterly step in the right direction during a seasonally sleepy part of the operating calendar would be a good move.