Sunday, April 24, 2011

RadioShack Corp. (NYSE: RSH): Q1 Earnings Preview 2011

RadioShack Corp. (NYSE: RSH) is scheduled to release its first-quarter earnings after the closing bell on Tuesday, February 22, 2011. Analysts, on average, expect the company to report earnings of 35 cents a share on revenue of $1.07 billion. In the year ago period, the company reported earnings of 39 cents per share on revenue of $1.04 billion.

RadioShack Corporation engages in the retail sale of consumer electronic goods and services through its RadioShack store chain and non-RadioShack branded kiosk operations. RadioShack's retail network includes approximately 4,695 company-operated stores in the United States and Mexico, more than 1,265 wireless phone kiosks in the United States, and approximately 1,220 dealer outlets worldwide.

In the preceding fourth quarter, the Fort Worth, Texas-based company's net income was $57.0 million, or 51 cents per share, compared to $75.7 million or 60 cents per share, in the prior-year quarter. Net sales and operating revenues for the quarter rose 3.8 percent to $1.37 billion from $1.32 billion last year. Analysts, on average, expected the company to report earnings of 53 cents per share on revenue of $1.37 billion.

The company has been plagued by shrinking margins due to higher demand for lower-margin wireless handsets and increased markdowns. The company also faces stiff competition from bigger rival Best Buy Co Inc's (NYSE: BBY) aggressive targeting of the wireless space.

RadioShack has been busy rebranding its image in an advertising campaign designed to give the company a more contemporary image, calling itself simply "The Shack" and dropping the "Radio." It's an effort to appeal to a generation who has grown up listening to iPods, rather than radios. RadioShack has been also focusing attention on the latest and greatest products: smartphones and tablets. RadioShack is now selling the iPad2 and is also selling a number of smartphones.

The company's stock currently trades at a forward P/E (fye Dec 31, 2012) of 8.47 and PEG ratio (5 yr expected) of 1.15. In terms of stock performance, RadiShack shares have lost nearly 33 percent over the past year. 

Full Disclosure: None.

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