Consumer electronics retailer Conn's (NASDAQ:CONN) will report third-quarter earnings on Thursday. Here's a view on what analysts are expecting that's as clear as any liquid crystal display.

What analysts say:

  • Buy, sell, or waffle? The six analysts covering Conn's are evenly split on whether the stock is a hold or a strong buy. That's actually a downward trend from last month, when four thought the retailer was a strong buy and only two said hold.

  • Revenues. Revenues were expected to tick up 3.7% in the quarter, to $179.7 million, but management reported at the beginning of the month that net sales (which excludes revenues from finances charges) actually fell 0.4% from last year.

  • Earnings. Earnings are anything but electric as well, with analysts forecasting a 15% drop to $0.32 per share.

What management says:
Where many businesses were hurt last year by the impact of hurricanes Rita and Katrina, Conn's Chairman and CEO Thomas Frank said his company actually benefited from the storms. Located in Texas and Louisiana, the appliance and electronics retailer's customers bore the brunt of the hurricanes, and came to rely upon Conn's to help rebuild their lives. Same-store sales surged more than 23% in the third quarter last year, while net sales were up 33%. That makes for a tough year-over-year comparison coming into this year, and Conn's will have to contend with it again next quarter, and possibly the one after that as well.

What management does:
While Conn's was experiencing the tough quarterly comparisons, it also saw its costs rising by a commensurate amount to sales. So despite having essentially maintained the large sales volume of last year, it saw revenues from finance charges decline by more than 10% in the last quarter. The hurricanes obviously affected customers' ability to pay their bills, and Conn's saw its delinquencies rise -- but delinquencies also stayed higher for longer than the company anticipated.

Margins %

7/05

10/05

1/06

4/06

7/06

Gross

36.3

36.0

35.3

34.9

34.4

Op.

9.1

9.1

9.1

9.1

8.5

Net

5.7

5.7

5.9

5.9

5.6
All data courtesy of CapitalIQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
At the beginning of the year, Conn's was riding high at $44 a share, but it now sits at $24 -- some 45% below those highs. Yet that's better than where it was back in August, when it dipped below $18 a share. Although the stock has recovered by a third from its nadir, I'm heartened by the company's ability to lock in the net sales growth of last year, even if it is suffering higher default rates on its credit business. I think with at least one more quarter of tough comps to go up against, it's possible that investors might see another dip into the low $20s. Still, they should view such a slide as a buying opportunity. Conn's, it seems, isn't trying to con anyone with its performance, but has used the hurricane tragedy to better its position while assisting its customers in healing.

Competitors:

  • Best Buy (NYSE:BBY)
  • CircuitCity (NYSE:CC)
  • Wal-Mart (NYSE:WMT)

Related Foolishness:

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Fool contributor Rich Duprey owns shares of Wal-Mart, but does not own shares of any of the other stocks appearing in this article.The Fool has a disclosure policy.