Conns stock is getting cheap in 2022, with stock price declining over 60% over the past year. The specialty appliance, electronics, and furniture retailer faced headwinds in 2022 thanks to the bear market and other factors such as increased logistic expenses and supply chain disruptions.
The stimulus money provided by the state to consumers was used on home products allowing the company to enjoy the pent-up demand. Now with the withdrawal of stimulus, the reversions as expected happened.
Fiscal 2022 Quarter 1 Earnings
Conn’s released its first-quarter earnings in June for the quarter ended April 2022, posting earnings per share of $0.25, beating analyst estimates of $0.17.
Revenues declined 6.6 % to $339.8 million, falling short of estimates of $ 360.78 million on a Y-O-Y basis. Total sales fell by 9.5% for the past year but rose 9.9% for the two years.
Opening of New Stores and Strategic Tie-Ups
Conn plans to open 24 to 30 new stores in 2022 – around 10-14 standalone stores and 20 to 34 stores. The company has added their new Home Plus stores in Quarter 1, taking the present numbers to 161 stores in 15 states.
The company has entered into a strategic store-in-store partnership with Belk, a department store chain. Each location will have 10,000 to 25,000 square feet of space, and Conn expects to open 10-20 such locations in 2022.
On the E-commerce front, sales grew by 71 % in Quarter 1, with a company also upgrading its digital infrastructure. The company plans to accelerate its digital transformation and integrate its now purchased lease into its platform by the 2025 final quarter. With these steps, Conn expects to add another $25 million in annual incremental income by the fiscal year 2025.
Conn’s store looks similar to other large competitors carrying many products. However, Conn’s business model and customer are different. According to CEO Holt, 6 out of 10 customers are financial access customers. Traditional branded credit cards and installment loans are offered to those customers who are not eligible for financing elsewhere.
Conn Stock Forecast
The Conn stock price at the time of writing this article was $9.02 with an earnings ratio of 4.03 and earnings per share of 2.24. According to several stock analysts, the average stock price forecast is $15.3- an increase of 69.6 %, with a minimum target of $13.13 and a maximum target of $17.85.
The Conns stock is getting cheap to buy at current price levels resulting in an average rating by analysts as “Buy”. The stock will likely outperform the projected bear market in the next 12 months.
Conclusion
The question is should you invest in Conn’s now? Prudent investors looking to take exposure in retail home electronics can invest in stock Conn as there are high chances of a pullback in share prices.
