Critical Analysis: hhgregg (HGGGQ) & Conn’s (CONN)

hhgregg (OTCMKTS:HGGGQ) and Conn’s (NASDAQ:CONN) are both small-cap retail/wholesale companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, profitability, valuation, risk, dividends and earnings.

Profitability

This table compares hhgregg and Conn’s’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
hhgregg N/A N/A N/A
Conn’s 2.25% 10.05% 2.98%

Institutional & Insider Ownership

67.7% of Conn’s shares are owned by institutional investors. 53.1% of hhgregg shares are owned by company insiders. Comparatively, 3.3% of Conn’s shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of current recommendations for hhgregg and Conn’s, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
hhgregg 0 0 0 0 N/A
Conn’s 0 1 5 0 2.83

Conn’s has a consensus target price of $42.75, suggesting a potential upside of 46.81%. Given Conn’s’ higher possible upside, analysts plainly believe Conn’s is more favorable than hhgregg.

Valuation & Earnings

This table compares hhgregg and Conn’s’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
hhgregg $1.96 billion 0.00 -$54.87 million N/A N/A
Conn’s $1.52 billion 0.61 $6.46 million $0.95 30.65

Conn’s has lower revenue, but higher earnings than hhgregg.

Risk and Volatility

hhgregg has a beta of 1.03, indicating that its share price is 3% more volatile than the S&P 500. Comparatively, Conn’s has a beta of 1.85, indicating that its share price is 85% more volatile than the S&P 500.

Summary

Conn’s beats hhgregg on 9 of the 11 factors compared between the two stocks.

hhgregg Company Profile

hhgregg, Inc. operates as an appliance, consumer electronics, and furniture retailer. The company's appliances products include refrigerators, cooking ranges, dishwashers, freezers, washers and dryers, grills, air conditioners, and small home appliances; consumer electronics products comprise LED televisions, audio systems, cameras, and Blu-ray players; furniture, mattresses, and other home products; and computers, computer accessories, and tablets. As of March 2, 2017, it operated 220 stores in 19 states of the United States. The company was founded in 1955 and is headquartered in Indianapolis, Indiana. On March 6, 2017, hhgregg, Inc., along with its affiliates, filed a voluntary petition for reorganization under Chapter 11 in the US Bankruptcy Court for the Southern District of Indiana.

Conn’s Company Profile

Conn's, Inc. operates as a specialty retailer of durable consumer goods and related services in the United States. The company operates through two segments, Retail and Credit. Its stores provide furniture and mattress, including furniture and related accessories for the living room, dining room, and bedroom, as well as traditional and specialty mattresses; home appliances, such as refrigerators, freezers, washers, dryers, dishwashers, and ranges; consumer electronics comprising televisions, Blu-ray players, home theaters, and portable audio equipment; and home office products consisting of computers, printers, and accessories. The company also provides short- and medium-term financing to its retail customers; and product support services, such as next-day delivery and installation services, credit insurance products, product repair services, and repair service agreements. As of September 4, 2018, it operated 119 HomePlus retail locations in Alabama, Arizona, Colorado, Georgia, Louisiana, Mississippi, Nevada, New Mexico, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, and Virginia. Conn's, Inc. was founded in 1890 and is headquartered in The Woodlands, Texas.

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