| Stock (Symbol) | Stock Price | |
Conns (CONN) |
$40 |
|
| Data is as of | Expected to Report | Sector |
April 7, 2014 |
Jun 2 – Jun 6 |
Retail & Travel |
| Sharek’s Take | ||
| Conn’s (CONN) got crushed because its customers haven’t been paying their bills on time. Collections are growing faster than sales and that spooked investors. This is the 2nd time in the last year CONN dropped on credit concerns, as it also did so 3 qtrs ago. So now the trend is stock down on bad credit, stock up on good credit, stock down on bad credit. I think people are reading too much into this, Conn’s has been toting their own notes for many years, and I think they know what they are doing. Conn’s recently transformed itself from an electronics store by adding high-margin furniture. Their new store model is a big money-maker: $1 million investments bring in pre-tax profit of $3.4 million in the first year. There was 74 locations around the end of last year and there will be 15 to 20 new stores this year, with potential for 300 across the U.S. I think the stock will double once this credit issue settles down. | ||
| One-Year Chart | ||
 Estimates got cut but still 36% and 62% profit growth is expected the next two qtrs. The stock has a P/E of only 11? It’s not like we are going into a recession. The Est LTG is 23%, that’s good. This stock has huge upside potential for the long-run. |
||
| Earnings Table | ||
 Profits jumped 67% last quarter on a 44% rise in sales. And the stock went down? Are you kidding me?Conn’s missed estimates by 16 cents but these were inflated a quarter earlier when the company raised estimates. Annual Profit Estimates got slashed — and you can see the trend from $3.57 to $3.93 and now $3.52 the last three-quarters. CONN is set to make $3.50 and the stock is only $40. Quarterly estimates continue to look great, even after falling. |
||
| Fair Value | ||
 Historically, when a company finally gets it together and smashes through the old profit high set a years ago, this often leads to even bigger gains ahead. That’s what I think of when I see this Profit History table. I think the stock’s worth 20 times earnings, and has solid upside to Fair Value. Plus, notice how 2014’s & 2015’s estimates are in a new territory. What if CONN can continue to grow 23% a year after that? |
||
| Ten-Year Chart | ||
 This stock was making good gains until it warned us of bad credit in February. 2007 – 2012 is really when the company took a beating in electronic sales. Still, it made money. I think Conn’s did better than Best Buy in transitioning itself. |
||
| Power Ranking | Bottom Line | |
Growth Portfolio
17 of 26 |
I think investors need to relax on Conn’s credit concerns. There’s a lot of stocks in this market that have little upside. At 11 times earnings the stock is not only cheap but possesses solid upside to fair value. I’m seriously considering adding to my position here. CONN ranks 17th of 26 stocks in the Growth Portfolio Power Rankings. Although it’s not timely, I would rather buy more shares then sell them, and the stock will continue to be in the Aggressive Growth Portfolio where it will rank 12th of 12 stocks. |
|
Aggressive Growth Portfolio
12 of 12 |
||
