Will Conns (CONN) Continue Its Dismal Trend In Q1 Earnings?

Conns Inc. (NASDAQ:CONN) is slated to release first-quarter fiscal 2017 results on Jun 2. Last quarter, the company had delivered a significant negative earnings surprise of 59.3%. In fact, it has underperformed the Zacks Consensus Estimate by an average of 36.5% over the trailing four quarters. Let’s see how things are shaping up for this announcement.

Factors Influencing this Quarter

Conns has posted lower-than-expected earnings for two straight quarters now, reflecting softness in comparable store sales (comps) and high year-over-year delinquencies.

The company recently reported sales and delinquency data for the month and first quarter ended Apr 2016, with comps declining 1.9% and 3.4%, respectively. On excluding the impact of Conns’ decision to discontinue the sale of video game products, digital cameras and certain tablets, comps for April remained flat while dropping 1.3% for the quarter. Moreover, the greater than 60-day delinquency rate expanded by 20 basis points year over year, as of Apr 30, 2016, on account of persistent deceleration in portfolio growth rate. Hence, we remain cautious about the company’s performance in the to-be-reported quarter.

Earnings Whispers

Our proven model does not conclusively show that Conns is likely to beat estimates 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 for Conns is currently pegged at 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at breakeven.

Zacks Rank: Conns carries a Zacks Rank #5 (Strong Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks Poised to Beat Earnings Estimates

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:

Ctrip.com International Ltd. (NASDAQ:CTRP) , expected to report earnings on Jun 1, has an Earnings ESP of +17.91% and a Zacks Rank #3 (Hold).

Nike Inc. (NYSE:NKE) , expected to report earnings on Jun 23, has an Earnings ESP of +2.08% and a Zacks Rank #3.

Fastenal Company (NASDAQ:FAST) , expected to report earnings on Jul 12, has an Earnings ESP of +17.91% and a Zacks Rank #3.

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