Conn's Misses EPS Consensus, Hits Seven-Year High on Strong Guidance

Conn's Inc.

is riding high on Wednesday due to strong guidance, despite falling short on the EPS front. The Beaumont, Texas-based firm's fourth quarter fiscal 2013 EPS grew 108 percent year-over-year to $0.50, but fell short of the $0.56 Wall Street consensus. Fourth quarter revenue closed up 10.5 percent at $250.3 million, topping estimates of around $247 million. Full-year earnings rose to $1.56 per share after the home goods retailer lost $0.12 per share in FY 2012. Yet, it rounded out below expectations of $1.65 per share. FY 2013 revenue finished up nine percent at $865.03 million and beat analysts' hopes of $860.61 million.

Conn's retail segment grew nearly 10 percent during the quarter to almost $209 million. A majority of this growth was fueled by an increase of over 54 percent in furniture and mattress sales. And, a double-digit increase in appliance and home office equipment sales further facilitated a successful fourth quarter in this segment. For the year, the updating of 20 existing stores to the Conn's HomePlus format helped drive growth.

Conn's credit segment rose 14.5 percent and finished with sales of $41.61 million during the quarter. For the year, this segment rose nine percent to $149.5 million. The company attributes the increase primarily to an increase in the average receivable portfolio balance outstanding.

After closing 11 stores in FY 2012 and thus reducing its store count by over 14 percent, Conn's bounced back in FY 2013. The company opened five stores and closed two for a net gain of three. It finished the year with 68 stores. However, on February 13, the company announced the sale and long-term leaseback of four owned properties to STORE Capital Acquisitions, LLC. With four less stores, Conn's now has 64 locations - less than the 65 it opened FY 2013 with.

On March 28, Conn's completed an expansion of its asset-based loan facility with a syndicate of banks. Its revolving facility commitment rose $40 million to $585 million.

Conn's anticipates EPS of $2.40 to $2.50 for FY 2013. If this pans out, it will blow away analysts' expectations of $2.09 per share.

After hovering in the mid-$30s for about a month, Conn's is up big on its positive guidance. The stock is hovering around $40 in the late-morning hours of trading. It is at a its highest point since February of 2006. Conn's has surged nearly 11 percent on Wednesday.