Conn's, Inc. (NASDAQ:CONN)

Bevo

Conn's Inc has been having some steep share price cycles. Weak margins. Keeps spiking after earnings and fooling the shorts. Heavy short position that is getting forced to cover. (Silly shorts). Timing a downthumb is tough with the low volume, but high short position. Overall, while they are holding market share, the market share of home appliances, consumer electronics (I.E. Big screen TV's), furniture and mattresses are under attack from either changing trends or the recession. Low float, high shorts, trading near book, weak margins. Decent cash flow and a great job of paying down debt.

I'm playing this one mostly for a decline of the 100% gain since early September. 30-50% spikes on this one have not been unusual the past six months, but fundamentally are likely to continue retracing.

Short term call. Target around $8 or maybe a little more. Low float and insider holding makes this one fickle. Texas, Lousiana, and Oklahoma may have some repeat customers after disasters, but the lawn and garden products division are looking for a brusing if the Texas drought continues.

Holiday Season jump right along with HGG.

must be tracked media appliance is new convergence trend

http://www.fool.com/investing/general/2011/04/05/this-stock-could-short-circuit-your-portfolio.aspx

OCTOBER 2010
@ or below 4.75 looking for at least 50%
GOD Bless

Insider Buying and 50% loss in stock price can be a powerful but risky catalyst for profits.

Having been burned by this baby on a recommended buy, I learned to do the hard research on a company BEFORE listening to the experts. CONN is going to fail by the same model that CIrcuit City crumbled to: trying to win on price against Best Buy. They are cutting service at all their stores by cutting staff, to compete on the margins, and will lose customers as they grow tired of waiting in lines to get advice, when they can go to Best Buy and wait in lines and save 5-10% more on every purchase.

Undervalued on p/s and p/b
- profitable
- good insider holding.
-

Conn's sells home appliances and consumer electronics in 75 retail stores located in Texas, Louisiana, and Oklahoma.

Current Trading Metrics:

PE for FY 2010 Est. = 6.06x
PE for FY 2011 Est. = 5.18x

Compare this to a median for specialty retailers (BBY, BBBY, HGG, DELL, RSH) of:

PE for FY 2010 Est. = 15.92x
PE for FY 2011 Est. = 14.10x

Is this massive discount justified? My analysis says no based on three factors:

1. Analysts have downgraded this stock because of its geographic concentration in Texas. Analysts say that the Texas economy is showing delayed signs of the economic downturn therefore Conn's will face headwind over the next 9-12 months. Compare this to analysts projections for HHGregg (trading at a 19.59x PE multiple on FY 2010 estimates) which has concentration in the southeast and mid-atlantic. Supposedly growth prospects in those markets are greater because those markets are already in mid-cycle. I disagree with this analysis because I don't believe Texas is cycling on a lag; I believe Texas will suffer less of a cycle than the rest of the country because of the robustness of its economy in regards to housing. If you disagree with this, then by all means don't buy on the discount.

2. The absence of Circuit City from the electronics market will provide runway for sales growth over the next two years.

3. The company has an established niche market. Although it competes directly with electronics titan Best Buy in many of its locations, I believe its customer base is different in demographic and preference terms-customers seeking better service, more knowledgeable sales staff, and a more personalized buying experience.

In terms of risks:

Adj. leverage¹ 3.00x compared to industry median of 3.03x and HHGregg's multiple of 3.37x. I use adjusted leverage rather than straight leverage because of the prevalence of store leasing contracts among retailers.

The company does have more exposure to credit risk because of its credit program. Losses there have been significant but are likely reaching cycle highs.

Note: As of market close 11/22/09; All metrics calendarized to January year end to provide better comparison with Conn's fiscal estimates.
¹ Adjusted leverage = (Total debt + 8 x Rent expense) / LTM EBITDAR

Unbelievable company with an unbelievable business model trading at a 90% discount to its true value. Can't go wrong. Also, Current Assets minus Total Liabilities equals $198M. With the stock trading at $147M, the current trading price of the firm's aggregate fixed assets is -$51M. The market will pay you $51M to take the company's fixed assets off their hands.

Hopefully a bounce on November 25th, 2009 when they release quarterly results.

This is one of the best buys out there at the current price compared to book value , debt etc.

PE is very low at this price. With government stimulus on appliances coming up plus economic recovery, this company should do well.

Short sqeese from 6,5 to 10 ... sell after that

A great retailer in the Texas are that has undergone severe problems recently but should recover strongly. It is undervalued.

This company hasn't had a year with earnings losses for the last ten years, and yet it is now trading at 55% of tangible book value and 84% of net current asset value. Mr. Market is pretty down on this company right now and I think the companies true value will show up in a price recovery. Standard & Poor gives this company a valuation of $17.00

Pick on a dip

Mmm...appliances and electronics...

This stock is way oversold. They've already come out and said their quarterly revenue increased 2%. I suppose the knock was the decrease in same store sales but most of that can be attributed to hurricane Ike. Also, this is a regional player..mainly in Texas with some stores in La an Oklahoma. These areas haven't been nearly as hard hit by the 'credit crisis' as other areas. They are still a relatively small player an are growing. This stock is both a great value play and a great growth play.