Is This the Turnaround Conn's Has Been Waiting For?

Conn’s Inc. (NASDAQ: CONN) released its fiscal second-quarter financial results before the markets opened on Tuesday. The company said that it had $0.57 in earnings per share (EPS) and $384.62 million in revenue, which compares with consensus estimates of $0.41 in EPS and revenue of $384.09 million. In the same period of last year, the retailer said it had EPS of $0.26 and $366.65 million in revenue.

During the most recent quarter, the company notched its first positive same-store sales, 0.3%, in three years. At the same time, the firm reported a record retail gross margin of 41.4%.

Looking ahead to the fiscal third quarter, the company expects to see same-store sales between −5% and 0%, with a retail gross margin between 40.5% and 41.0%. Consensus estimates call for $0.52 in EPS and $393.58 million in revenue for the quarter.

Norm Miller, Conn’s board chair and chief executive, commented:

Second quarter financial results were driven primarily by positive same store sales, the contribution of new store growth, record retail gross margin, and continued improvement in credit segment performance.  The initiatives to drive retail growth are starting to take hold and second quarter same store sales increased for the first time since the second quarter of fiscal year 2016, while total retail sales were up 3.5% over the prior year period.  The momentum in our business is encouraging and we continue to believe fiscal year 2019 will be a strong year.

Shares of Conn’s closed most recently at $41.00, with a consensus analyst price target of $42.42 and a 52-week trading range of $18.55 to $41.35. Following the announcement, the stock was up over 9%, at $44.89, in early trading indications Tuesday.