RSH - Radio Shack

**dchamber** Fri Feb 10, 2006 12:00 am

RSH - Radio Shack
Any opinions of Radio Shack?
The P/E is now 9 and their ten year average is 19. The industry average is 21.
Most radio shack stores around here have closed. I was biased but looking at the number its not that bad.
ROE has been excellent, always over 35% for the lasst 5 years.
The book value seems steady and that worries me.
Shares outstanding has been descreasing slighlty for over 10 years.
Sales have been slowly increasing since 1998.
The current ratio is 1.3 and that worries me a little but having CURRENT assets greater that TOTAL liabilites should provide some saftey.

Looks like a troubled company but it also seems cheap now. Can they recover?
With a 7% ESP growth rate (half of the industry rate) they should return 15% annualized if they can get back to their average P/E, which is a couple of points below the industry.
If they just get back to the average P/E in a few years we could get an 18% - 20% gain.

Lots of ifs here. I'm not sure and would welcome opinions.

**blast_investor** Fri Feb 10, 2006 6:10 pm

This stock actually is pretty attractive. It's valuation is low at PE of 9.7. It also has very high return on asset and high return on equity.

Insiders also has been buying this stock, no large selling.

I wonder why this shares has performed so poorly in recent years? Its business model is very sound.

**teenvestor2** Mon Feb 13, 2006 9:06 am

If you're looking for a little scuttlebut, check out this site - http://www.radioshacksucks.com/

**teenvestor2** Mon Feb 13, 2006 9:10 am

Just a quick look EV/FCF is 12.88, high than p/e b/c of huge debt load, which is 883.3 mm in total debt, only 47.4 mm in cash. 1.76 D/E, 1.2% dividend yield, .58 price/sales, current ratio 1.316 and price/book 5.81.

-Mike

**dahhuilaudavid** Fri Feb 17, 2006 1:41 pm

1. The only part of RadioShack's business that has been growing consistently is the wireless communications segment. As a group, all of the company's other businesses are shrinking.

2. Fierce competition (from Best Buy BBY, Circuit City CC, Amazon AMZN) in home electronics could limit growth opportunities in that area.

3. RadioShack has a lot of capital tied up in inventory. In fact, its inventory turns look more like those of a bookstore than an electronics retailer. Inventory increased by 33% from year 2004 to 2005, yet sales only increased less than 5%.

4.Sprint Nextel becoming increasingly focused on expanding its business through direct sales.

4. David J. Edmondson lied about his 2 degrees (theology and psychology from Pacific Coast Baptist College in California). (Fake!) Feb 14, 2006. This is a very, very serious stuff!!!

I understand that the stock is at 52 weeks low, but it has some serious issues like the CEO cheating about his degrees, fierce competition from all retailers, significant inventory increase, etc. Be wary.

Have a read on the recent news:
http://www.bloomberg.com/apps/news?pid=10000103&sid=aNzI2xhOWurc&refer=us

All the best,
Dah Hui Lau (David)
http://dahhuilaudavid.blogspot.com/

**blast_investor** Fri Feb 17, 2006 3:57 pm

Just a note here from recent Wall Street Journal.

The CEO of Radio Shack was caught recently for ethical problems.
He faked his BA degree and in fact he admitted that he only got diploma, no Bachelor. Even more, he does not have proof of the diploma either.

Now the WSJ article said that board is still thinking on the actions, fire or keep. The article raised an interesting question: CEO faked degree, did he fake other stuff (for example, accounting book)?

**vin** Sat Feb 18, 2006 11:17 pm

below is on 8k posted Feb this year.

"RadioShack generated $158.5 million in free cash flow(1) in 2005. Free cash flow for 2005 came in higher than management’s prior projections largely due to the timing of year end reconciliation of matters related to the transition of wireless carriers. This factor drove accounts payable at year end approximately $65 million higher than anticipated.

The company is initiating fiscal year 2006 estimated free cash flow guidance of $50 million to $100 million. "

For FCF =50 million, P/fcf >40 for 2006, with d/e =1.7, no cash reserve and history of their management, radio shack is not good investment , at least for now.

**blast_investor** Thu Feb 23, 2006 8:38 pm

Radio Shack chief exec resigns amid resume flap

DALLAS - RadioShack Corp.'s embattled president and CEO, David Edmondson, resigned Monday following questions about his resume's accuracy.

The Fort Worth electronics retailer said in a statement that its board had accepted his resignation and had promoted Claire Babrowski, who most recently served as executive vice president and chief operating officer, to acting CEO.

**blast_investor** Thu Feb 23, 2006 8:40 pm

Radio Shack to close hundreds of stores

Monday, February 20
FORT WORTH, Texas (AP) — Electronics retailer RadioShack Corp. on Friday said fourth-quarter earnings dropped 62 percent and said it plans to close 400 to 700 underperforming stores and distribution centers in Charleston, S.C., and Southhaven, Miss., as part of a plan to improve its financial performance.