Saturday, June 14, 2014

RadioShack Corporation (RSH) Q1 Earnings Preview: Ugh, It’s Been UGLY

RadioShack Corporation (NYSE:RSH) will host a webcast of its Fiscal 2015 first quarter earnings conference call with investors starting at 10 a.m. ET on Tuesday, June 10, 2014, to review financial results for the first quarter, which ended May 3, 2014.

Wall Street anticipates that the electronics retailer maker will lose $0.52 per share for the quarter, which is $0.17 less than last year's loss of $0.35 per share. iStock expects RadioShack to miss Wall Street's consensus number, the iEstimate is -$0.60, too.

Sales, like earnings, are expected to fall -9.6% year-over-year (YoY). RadioShack's consensus revenue estimate for Q1 is $767.45 million, which is less than last year's $849.00 million.

[Related -RadioShack Corporation (NYSE:RSH): 4 Reasons To Dump This Struggling Retailer]

RadioShack is engaged in the retail sale of consumer electronics goods and services through its RadioShack store chain. The Company' segments include U.S. Radioshack Company-Operated Stores and Others. In April 2014, RadioShack Corp opened two new concept stores in China and Malaysia.

It's been a tough couple of years for the Shack. The specialty retailer missed Wall Street's outlook nine of the last 12 quarters, and usually it's not even close to the consensus. RSH averaged, averaged $0.23 less than the consensus estimate for the nine bearish misses with a range of -$0.02 to -$0.24 less than expected.

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To the magnitude of the misses in perspective, RadioShack's profits were typically 197% less than forecasted for the nine EPS shortfalls. That's U-G-L-Y.

[Related -RadioShack Corporation (RSH) Q4 Earnings Preview: Time to Throw in the Kitchen Sink?]

The other three, non-misses in the last three years included two on-target results with a bullish surprise of 300% in the mix.

As you might expect with those quarterly results, RSH has been a poor performer in the days surrounding the earnings announcement. Investor reaction favored bears nine of the last 12 releases, dropping from -3.8% to -31.5% while averaging a loss of -10.78%. Shares gained 0.5%, 1.3% and 5.9% for the trifecta of green reactions – nothing to brag about there.

As bleak as the above sounds, RadioShack might be in for a little better quarter than thought and history projects. According to Google Trends, search volume intensity (SVI) for the keyword Radio Shack is down 4% compared to last year's first quarter. Remember, sales are slated for nearly a 10% decline. If SVI translates, RSH could post better than expected revenue.

As for EPS, who knows as the company is in the middle of revamping stores and closing underperformers, all of which have unpredictable costs. At the same time, SG&A expense as a percent of sales jumped to 41% of sales last year from 37.1% the previous year. That makes for skinnier margins and bigger losses.

Overall: Google trends suggest RadioShack Corporation (RSH) might, mildly surprise on the top-line; however, the iEstimate, RSH's awful recent history, and rising cost point at another EPS miss. 

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