2-Star Stocks Poised to Plunge: Conn's?
Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, home appliances and consumer electronics retailer Conn's (NAS: CONN) has received a distressing two-star ranking.
With that in mind, let's take a closer look at Conn's and see what CAPS investors are saying about the stock right now.
Conn's facts
Headquarters (founded) | Beaumont, Texas (1890) |
Market Cap | $522.8 million |
Industry | Computer and electronics retail |
Trailing-12-Month Revenue | $801.2 million |
Management | CEO Theodore Wright (since December 2011) |
Return on Equity (average, past 3 years) | (0.1%) |
Cash/Debt | $6.7 million / $298.1 million |
Competitors | Best Buy |
Sources: S&P Capital IQ and Motley Fool CAPS.
On CAPS, 13% of the 335 members who have rated Conn's believe the stock will underperform the S&P 500 going forward.
Just last week, one of those Fools, jed71, succinctly summed up the bear case for our community:
This company relies on folks with crappy credit to come in and purchase appliances / mattresses on credit. This type of consumer loan is called PMSI (purchase money security interest) -- and it comes with much higher risks and default rates. ... Most of these terms have a hidden cost to consumers, which many do not fully understand. Conn's is getting themselves back into the same situation they were in during late 2008 / early 2009. ... You can see their cash from operations balances beginning to decline (quarter over quarter). I would be careful with this one -- if the US economy continues to falter, this one will fall fast and hard.
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At the time thisarticle was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Fool owns shares of Best Buy. Motley Fool newsletter services have recommended creating a bull call spread position in Wal-Mart. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.
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