Conn’s Inc. (CONN) is slated to report its third-quarter fiscal 2015 results on Dec 9, 2014. In the last quarter, the company had delivered a negative earnings surprise of 32.4%. 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 these rates to continue rising. Management believes that the headwinds related to volatility in the subprime consumer credit market will persist, owing to their inherent nature and impact the company’s performance.
However, Conn’s remains hopeful about receiving some cushion from its retail segment which is performing well, backed by store openings. Hence, the company aims to target sales improvement by concentrating on profitable product lines, amid the tough credit environment.
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: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is currently pegged at 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate both stand at 68 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:
Best Buy Co., Inc. (BBY) has an Earnings ESP of +0.76% and a Zacks Rank #2 (Buy).
Lowe's Companies Inc. (LOW) has an Earnings ESP of +2.33% and a Zacks Rank #2.
Costco Wholesale Corp. (COST) has an Earnings ESP of +0.93% and a Zacks Rank #3.
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