Conn's Stock Hopes to Avoid Best Buy's Trap on Thursday

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One of retail's most volatile stocks will get another reason to rock and roll this week, as Conn's (NASDAQ: CONN) reports quarterly results on Thursday morning. Analysts aren't holding out for much. They see revenue sliding nearly 7% to $371.9 million with the chain's quarterly deficit being cut in half to $0.02 a share. 

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This isn't the kind of performance that investors typically associate with a hot stock, but shares of Conn's have soared 54% so far in 2017. The retailer of furniture, mattresses, and consumer electronics saw its stock crumble through the first three months of the year before more than doubling in the month of April. Conn's has gone on to pad those gains, hitting 52-week highs this summer.

Hoping to be a better buy than Best Buy

Conn's tends to move on earnings, and there should be a little more octane this time around for the 116-unit chain. Best Buy (NYSE: BBY) shares plummeted 12% last week after posting fresh financials. The larger consumer electronics giant posted better-than-expected results for its latest quarter, but Best Buy investors took a step back on a problematic outlook for the telltale holiday shopping season.

Conn's isn't a true Best Buy sympathy play. Conn's stock actually wrapped up last week exactly where it was when the week began, unchanged. The product mix at both retailers is very different. Just 21% of Conn's sales were consumer electronics in its latest quarter. Its largest category -- mattresses and furniture, accounting for a third of Conn's sales -- isn't a factor at Best Buy. 

The clientele is also different. Conn's relies on big-ticket purchases, and that often involves offering financing or rent-to-own programs to close the sale. Shares of Conn's have rocked up and down based on delinquency rates in the past. 

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Investors are feeling pretty good about Conn's prospects. The stock has nearly tripled over the past 12 months. Revenue has been slipping, but it's also the byproduct of the chain discontinuing less profitable products and beefing up its financing standards. If the big-box retailer is able to squeeze out a profit on Thursday morning -- something that is certainly within the scope of reason as Wall Street's only holding out for a deficit of $0.02 a share and Conn's has blown past Wall Street's profit targets with ease -- it would be the first time in two years that the chain turns a profit outside of the seasonally potent Christmas-containing quarter.

It's been a good year for Conn's shareholders, but things can get even better if things go right this week.

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Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.