Conn's (CONN) Is Today's Dead Cat Bounce Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Conn's ( CONN) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Conn's as such a stock due to the following factors:

  • CONN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $37.7 million.
  • CONN has traded 4.2 million shares today.
  • CONN is up 3% today.
  • CONN was down 6.2% yesterday.

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More details on CONN:

Conn's, Inc. operates as a specialty retailer of durable consumer goods and related services in Texas, Arizona, Louisiana, Oklahoma, and New Mexico, the United States. CONN has a PE ratio of 10.8. Currently there are 3 analysts that rate Conn's a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Conn's has been 1.1 million shares per day over the past 30 days. Conn's has a market cap of $755.2 million and is part of the services sector and retail industry. The stock has a beta of 0.88 and a short float of 49.1% with 5.92 days to cover. Shares are down 73.5% year-to-date as of the close of trading on Wednesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Conn's as a hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • CONN's revenue growth has slightly outpaced the industry average of 9.7%. Since the same quarter one year prior, revenues rose by 19.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • CONN'S INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CONN'S INC increased its bottom line by earning $2.54 versus $1.55 in the prior year. This year, the market expects an improvement in earnings ($2.89 versus $2.54).
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Specialty Retail industry and the overall market, CONN'S INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Specialty Retail industry. The net income has significantly decreased by 112.6% when compared to the same quarter one year ago, falling from $24.38 million to -$3.06 million.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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