| Stock (Symbol) | Stock Price | |
Conns (CONN) |
$70 |
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| Data is as of | Expected to Report | Sector |
December 6, 2013 |
Feb 21 – Feb 25 |
Retail & Travel |
| Sharek’s Take | ||
| Conn’s (CONN) is a retail chain in and around Texas that is getting a big ten-gallon boost in profits by adding furniture to its line of electronics and appliances. Last quarter the company beat the street and popped out some amazing figures. Most notably profit margin increased to 40% from 36% in just three months and same store sales growth was an amazing 35% year-over-year As a result management upped next year’s profit estimate from around $3.50 a share to $4.00 and the stock jumped from $58 to $74. Conn’s also has a powerful new store model where $1 million investments bring in pre-tax profit of $3.4 million in the first year. The company has 74 locations, will put up 15 to 20 next year, and there’s potential for 300 across the U.S. I will purchase CONN for clients in the Growth Portfolio and Aggressive Growth Portfolio. Conn’s is up to something big. | ||
| One-Year Chart | ||
 Looking at this one-year chart, I should have bought CONN earlier. But I am familiar with the company as an electronics retailer, and this turned me off. Furniture? I used to be the best furniture salesman in the mid-south and furniture is a ough business to make money in, so I wasn’t impressed with that — until now. |
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| Earnings Table | ||
 Last quarter, Conn’s had sales growth of 51% and profit growth of 92%.2QtrsAgo Conn’s missed estimates by 8 cents a share, and as you can see in the one-year chart this made the stock drop and also killed momentum. The recent beat and up caused the stock to breakout from a cup-and-handle, a bullish sign.Annual Profit Estimates for 2014 increased from $3.57 to $3.92. 2015’s estimate is a solid $5.18. Quarterly estimates look great and I bet they increase in the coming quarters. |
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| Fair Value | ||
 If CONN does make $5 in 2015, that means the stock’s selling for 13 1/2 times 2015 estimates. A year from today we will be valuing stocks on what they will make in 2015, and I doubt CONN will have a P/E of 13. It will more likely have a P/E of at least 18, which would be 33% stock growth from here. |
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| Conn Ten-Year Chart | ||
 This company was in bad shape for much of the last decade. Now it’s revitalizing stores, adding larger locations, and doing extremely well selling furniture. Conn’s also finances customer purchases. |
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| Power Ranking | Bottom Line | |
Growth Portfolio
8 of 25 |
Conn’s is putting up some amazing numbers, and I feel institutions recognize the value and push CONN’s P/E from a current 18 to 25. If CONN makes $5 in 2015 then 25 times that is $125. Profit estimates could also increase. This could be a leading retailer for years to come. On Monday I will purchase CONN for the Growth Portfolio and it will rank 8th of 26 stocks in the Power Rankings. I will also put it in the Aggressive Growth Portfolio where it will rank 7th of 11 stocks. |
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Aggressive Growth Portfolio
7 of 11 |
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