Conn’s Inc. CONN is slated to report its first-quarter fiscal 2016 results on Jun 2, 2015. In the last quarter, the company had delivered a negative surprise of nearly 27%. Let’s see how things are shaping up for this announcement.
Factors Influencing This Quarter
Conn’s was hit by extremely high delinquency rates in the previous quarter and it expects the rates to continue rising. Recently, the company reported its sales data for April and first-quarter fiscal 2016. Total retail sales for the first-quarter ascended 6.6% to $296 million, though comps for the quarter declined 4.6%.
Conns’ comps for the first quarter were adversely impacted by stricter underwriting along with lingering port labor disruptions at the West Coast, leading to supply chain issues. However, toward the end of April, comps started trending upward, backed by resolution of the labor disruptions, leading to enhanced inventories.
Going forward, management expects further improvement in the company’s inventory status and consequently lesser impact of labor headwinds on May sales.
Earnings Whispers?
Our proven model does not conclusively show that Conn’s is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:
Zacks ESP: Conn’s Earnings ESP is currently pegged at 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate both stand at 42 cents.
Zacks Rank: Conn’s carries a Zacks Rank #3 (Hold). Though Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult. We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Casey's General Stores Inc. CASY has an Earnings ESP of +14.29% and a Zacks Rank #2 (Buy).
Burlington Stores, Inc. BURL has an Earnings ESP of +5.00% and a Zacks Rank #3.
G-III Apparel Group Ltd. GIII has an Earnings ESP of +14.29% and a Zacks Rank #3.
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