Keep an Eye on This Retail Stock Later in the Week

Conn’s stock could be set up as a solid turnaround play

Mar 29, 2021 at 11:28 AM
facebook twitter linkedin


Furniture retailer Conn's, Inc. (NASDAQ:CONN) will report fourth quarter earnings on March 31 before the market opens. Ahead of the event, the specialty retail stock will look to reverse its recent history of sharp post-earnings moves lower.

For the fourth quarter of 2020, Conn’s missed analyst estimates by a margin of $0.15 and missed expectations by a significant margin of $1.57. For the second quarter of 2021, Conn's reported a big increase in earnings, rising to $0.75 per share. The company also beat estimates by a margin of $0.88. In the most recent quarterly report, Conn’s reported an EPS of $0.25 and beat expectations by $0.01. This time around, the options market is pricing in a larger-than-usual post-earnings move of 17.4%. 

However, the last three post-earnings reactions have been to the negative, including a 21.1% drop back in June. Nevertheless, CONN is up 207% year-over-year, with its 80- and 100-day moving averages doing most of the legwork in terms of support. 

CONN options can be had for a bargain at the moment. The security's Schaeffer's Volatility Index (SVI) of 90% sits in the 14th percentile of its annual range. This suggests the equity is sporting attractively priced premiums right now.

Conn's stock still maintains potential upside purely from a value perspective. Although the company is generating no net profit at the moment, the security has an extremely attractive forward price-earnings ratio of 10.81. Over the past year, Conn’s revenues have decreased by about $110 million or 7.3%. Its net income is also down nearly $80 million since January of 2020. Although there is no guarantee that the company will resume growth, Conn’s remains an intriguing turnaround play for potential investors. Take note of their $1.2 billion debt total and, on the flipside, Conn's cash and cash equivalents total $107.82 million.

 

If you are not making money with options, you aren’t buying options like this…

There is no options strategy that more perfectly approaches trading the fastest moving and most volatile stocks available in the marketplace than this one. In fact, there is no strategy that better utilizes put options for optimal returns and a real trading edge over other traders in the exact same market. New options traders fail out at an incredible rate without proper trade research, execution timing, and option picking. Capitalize on Schaeffer’s 100+ years of options trading excellence with the most coveted product launch in company history. Don't waste another second... join us right now before the next round of trades are released!

 


 


 
Special Offers from Schaeffer's Trading Partners