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Category: Stock Market and Conn's (CONN)
Date: 9 August 2020 Stock Price of Conns: $11.03 We take a look at the 2nd quarter earnings report of their 2020 fiscal year of Conn's home plus, the speciality furniture and related accessories group. Revenues declined by -10.3% for the quarter compare to the same quarter of the previous year and they reported a loss of -$56.202 in the latest quarter.
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The diversity of our retail products, financial offerings and distribution channels and resiliency of our associates allowed us to quickly respond to rapidly evolving market dynamics. - Norm Miller, Conn’s Chairman and Chief Executive Officer."
More About Conn's
We are a specialty retailer currently operating 128 retail locations in Alabama, Arizona, Colorado, Georgia, Louisiana, Mississippi, Nevada, New Mexico, North Carolina, Oklahoma, South Carolina, Tennessee, Texas and Virginia. We sell furniture and related accessories for the living room, dining room and bedroom, as well as traditional and specialty mattresses; home appliances, including refrigerators, freezers, washers, dryers, dishwashers and ranges; a variety of consumer electronics, including LED, OLED, Ultra HD and internet-ready televisions, Blu-ray players, home theater and portable audio equipment; and home office products, including computers, printers and accessories. We also offer a variety of products on a seasonal basis. Unlike many of our competitors, we provide flexible in-house credit options for our customers in addition to third-party financing programs and third-party lease-to-own payment plans.
Overview of Conn's 1st quarter 2021 earnings report
The data below refers to the latest quarter unless specified otherwise
- Total revenues: $401.059 million (up from $384.620 million for the same quarter of the previous year)
- Total costs and expenses: $359.285 million (up from $345.368 million for the same quarter of the previous year)
- Net income: $19.974 million (up from $17.011 million for the same quarter of the previous year)
- Net income per share: $0.62 (up from $0.53 for the same quarter of the previous year)
- Diluted number of shares in issue: 31,958,704
- Cash and cash equivalents: $7.563 million
- Cash and cash equivalents per share: $0.23 per share
- Cash and cash equivalents makes up 0.35% of the group's total assets
- Customer accounts receivable, net of allowances: $664.980 million
- Accounts receivable makes up 30.9% of the group's total assets (anything more than 20% and we get worried)
- Inventories: $213.513 million
- Inventories makes up 9.94% of the group's total assets
- Stockholders equity: $636.735 million
- Stockholders equity per share: $19.92
Conn's management commentary on their 1st quarter 2021 earnings
THE WOODLANDS, Texas, June 09, 2020 (GLOBE NEWSWIRE) -- Conn’s, Inc. (NASDAQ: CONN) (“Conn’s” or the “Company”), a specialty retailer of furniture and mattresses, home appliances, consumer electronics and home office products, and provider of consumer credit, today announced its financial results for the quarter ended April 30, 2020.
“Our response to the COVID-19 pandemic is focused on protecting the health and safety of our employees and customers, while providing essential home goods and financial products to our communities. As an essential business, we have maintained store operations throughout the COVID-19 pandemic through a mix of modified operating hours and enhanced employee programs, including temporarily increasing hourly wages by $2 per hour to support our front-line employees and implementing a work from home program for our corporate teams, so that we may continue to assist our customers get the goods they need to shelter-in-place. In addition, we have implemented payment deferral programs to provide relief to credit customers who were economically impacted by COVID-19,” stated Norm Miller, Conn’s Chairman and Chief Executive Officer. “The diversity of our retail products, financial offerings and distribution channels and resiliency of our associates allowed us to quickly respond to rapidly evolving market dynamics.”
“Our response to the COVID-19 pandemic is focused on protecting the health and safety of our employees and customers, while providing essential home goods and financial products to our communities. As an essential business, we have maintained store operations throughout the COVID-19 pandemic through a mix of modified operating hours and enhanced employee programs, including temporarily increasing hourly wages by $2 per hour to support our front-line employees and implementing a work from home program for our corporate teams, so that we may continue to assist our customers get the goods they need to shelter-in-place. In addition, we have implemented payment deferral programs to provide relief to credit customers who were economically impacted by COVID-19,” stated Norm Miller, Conn’s Chairman and Chief Executive Officer. “The diversity of our retail products, financial offerings and distribution channels and resiliency of our associates allowed us to quickly respond to rapidly evolving market dynamics.”
“Our first quarter results reflect an increase in our allowance for bad debts of $65.5 million, or $1.76 per diluted share, associated with accounting for the COVID-19 pandemic under the new CECL accounting methodology. Despite the loss we recorded for the three months ended April 30, 2020, we generated operating cash flows of $152.5 million, an increase of over 200% from the prior fiscal year period. We also recently amended our revolving credit facility to help navigate the COVID-19 crisis and had total cash and available liquidity at June 5, 2020 of over $295.0 million.”
“While the near term remains uncertain as a result of the COVID-19 pandemic, we believe we will benefit from the investments we have made to our business over the past four years, our experienced management team and the diversity of our retail and financial products. I also want to thank all of our associates for their continued dedication serving our customers through these uncertain times,” concluded Mr. Miller.
Showroom and Facilities Update
The Company opened two new Conn’s HomePlus® showrooms during the first quarter of fiscal year 2021, bringing the total showroom count to 139 in 4 states. During fiscal year 2021, the Company plans to open a total of six to eight new showrooms in existing states to leverage current infrastructure.
“While the near term remains uncertain as a result of the COVID-19 pandemic, we believe we will benefit from the investments we have made to our business over the past four years, our experienced management team and the diversity of our retail and financial products. I also want to thank all of our associates for their continued dedication serving our customers through these uncertain times,” concluded Mr. Miller.
Showroom and Facilities Update
The Company opened two new Conn’s HomePlus® showrooms during the first quarter of fiscal year 2021, bringing the total showroom count to 139 in 4 states. During fiscal year 2021, the Company plans to open a total of six to eight new showrooms in existing states to leverage current infrastructure.
Conn's (NASDAQ: CONN) stock price history over the last 5 years
The image below shows the stock price history of Conn's over the last 5 years. And the story its telling is one of volatile ride but with a underlying downward trend in the overall stock price. 5 years ago, the stock price of Conn's was trading at $35.60 a stock, and its currently trading at $11.03. So stockholders in the group lost -% over a 5 year period.
The stock of Conn's is trading a lot closer to its 52 week low than it is to its 52 week high which to us is a clear indication that the short term sentiment and momentum of Conn's stock is negative at this point in time.
The stock of Conn's is trading a lot closer to its 52 week low than it is to its 52 week high which to us is a clear indication that the short term sentiment and momentum of Conn's stock is negative at this point in time.
Conn's (CONN) vs Target (TGT) stock performance over the last 5 years
The image below shows the stock price performance of Conn's (CONN) and Target (TGT) over the last 5 years. Both are retailers of a wide variety of goods and hence the comparison. The summary below shows the stock price returns of Conn's and Target (sorted from best to worst performer)
The stock of Target has easily outperformed Conns over the lat 5 years.
- Target (TGT): 70.1%
- Conns: -60.68%
The stock of Target has easily outperformed Conns over the lat 5 years.
Recent coverage of Conn's
The extract below covers the latest regarding Conn's as obtained from SimplyWall.st
Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously said that ‘Volatility is far from synonymous with risk’. So it might be obvious that you need to consider debt, when you think about how risky any given stock is, because too much debt can sink a company. As with many other companies Conn’s, Inc. (NASDAQ:CONN) makes use of debt. But should shareholders be worried about its use of debt?
Why Does Debt Bring Risk?Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. If things get really bad, the lenders can take control of the business. However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. Of course, plenty of companies use debt to fund growth, without any negative consequences. When we examine debt levels, we first consider both cash and debt levels, together.
Read the full article here
Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously said that ‘Volatility is far from synonymous with risk’. So it might be obvious that you need to consider debt, when you think about how risky any given stock is, because too much debt can sink a company. As with many other companies Conn’s, Inc. (NASDAQ:CONN) makes use of debt. But should shareholders be worried about its use of debt?
Why Does Debt Bring Risk?Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. If things get really bad, the lenders can take control of the business. However, a more common (but still painful) scenario is that it has to raise new equity capital at a low price, thus permanently diluting shareholders. Of course, plenty of companies use debt to fund growth, without any negative consequences. When we examine debt levels, we first consider both cash and debt levels, together.
Read the full article here
Conn's (NASDAQ: CONN) latest stock valuation
So based on Conn's 1st quarter 2021 earnings report what do we value their stock at? It is always hard to value a loss making firm. In the case where a firm is loss making we tend to use the stockholders equity per share as the base of our valuation. And Conn's stockholders equity per share is currently sitting at $17.20. And this is what we will value the group's stock at.
We therefore believe the stock of Conn's is undervalued. Also keep in mind if you buy the stock at $11.03, 90% of that price is made up by cash on the balance sheet. So the rest of the business is purchased for the oter $2 per stock.
We expect the stock of Conn's to rise sharply as the impact of Covid-19 eases.
We therefore believe the stock of Conn's is undervalued. Also keep in mind if you buy the stock at $11.03, 90% of that price is made up by cash on the balance sheet. So the rest of the business is purchased for the oter $2 per stock.
We expect the stock of Conn's to rise sharply as the impact of Covid-19 eases.
Next earnings release of Conn's (CONN)
It is expected that Conn's will release their 2nd quarter 2021 earnings report in early November 2020