Conn's (CONN) Flagged As Strong On High Volume

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.

Trade-Ideas LLC identified Conn's ( CONN) as a strong on high relative volume 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 $50.2 million.
  • CONN has traded 156,204 shares today.
  • CONN is trading at 2.59 times the normal volume for the stock at this time of day.
  • CONN is trading at a new high 3.07% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on CONN:

Conn's, Inc. operates as a specialty retailer of durable consumer goods and related services in the United States. It operates through Retail and Credit segments. CONN has a PE ratio of 22. Currently there are 4 analysts that rate Conn's a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Conn's has been 925,600 shares per day over the past 30 days. Conn's has a market cap of $1.3 billion and is part of the services sector and retail industry. The stock has a beta of 2.76 and a short float of 50.9% with 9.08 days to cover. Shares are up 103.7% year-to-date as of the close of trading on Tuesday.

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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, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and generally higher debt management risk.

Highlights from the ratings report include:
  • CONN's revenue growth has slightly outpaced the industry average of 10.4%. Since the same quarter one year prior, revenues rose by 18.0%. 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.
  • Net operating cash flow has increased to -$63.11 million or 37.24% when compared to the same quarter last year. In addition, CONN'S INC has also modestly surpassed the industry average cash flow growth rate of 31.25%.
  • The gross profit margin for CONN'S INC is rather high; currently it is at 51.57%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 3.63% trails the industry average.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. 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 44.3% when compared to the same quarter one year ago, falling from $27.74 million to $15.46 million.

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