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Why Conn's (CONN) Is Plummeting Today

NEW YORK (TheStreet) -- Conn's (CONN - Get Report) was plummeting 32% to $37.85 on Thursday morning after the electronics and appliance retailer issued guidance that was less than analysts' expectations.

The company expects earnings per share of 75 to 80 cents, excluding items, for the fourth quarter. This range is well short of the Capital IQ consensus estimate of 93 cents. Conn's now expects EPS of $3.40 to $3.70 for the full fiscal year 2015. This is less than the consensus estimate of $3.96 and less than the company's own previous guidance of $3.80 to $4.

Same-store sales rose an estimated 33.4% from the fourth quarter one year ago, while preliminary retail segment net sales increased 44.8% year over year to an estimated $301.6 million.

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TheStreet Ratings team rates CONN'S INC as a "buy" with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate CONN'S INC (CONN) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, compelling growth in net income, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • CONN's very impressive revenue growth greatly exceeded the industry average of 6.8%. Since the same quarter one year prior, revenues leaped by 50.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • CONN'S INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, CONN'S INC turned its bottom line around by earning $1.55 versus -$0.12 in the prior year. This year, the market expects an improvement in earnings ($2.77 versus $1.55).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Specialty Retail industry. The net income increased by 106.8% when compared to the same quarter one year prior, rising from $11.79 million to $24.38 million.
  • The gross profit margin for CONN'S INC is rather high; currently it is at 51.71%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 7.85% is above that of the industry average.
  • Powered by its strong earnings growth of 88.57% and other important driving factors, this stock has surged by 78.28% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • You can view the full analysis from the report here: CONN Ratings Report

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