RadioShack: Aggressive Growth Buy Alert

RadioShack Corporation (RSH) has recently posted its fourth earnings surprise in the last four quarters. The announcement has produced huge gains over the past month. The company has also announced a plan to repurchase $200 million worth of common shares.

Company Description

RadioShack Corporation is a widely known retailer of electronic goods and services. The company operates through approximately 6,000 corporate-owned stores as well as over 700 kiosks, which are branded through wireless carriers. Company headquarters are in Fort Worth, Texas, it has over 33,000 full-time employees, and a market cap of $2.5 billion.

Another Earnings Surprise

RadioShack reported earnings per share of 32 cents for the second quarter of 2008, announced on July 24th. The 30% surprise was the fourth earnings surprise in as many quarters, the consensus was only 27 cents. After adjusting for one-time accounting changes, it was a 33% year-over-year increase.

Comparable Sales Increase

Comparable store sales rose 6.9% since the same quarter of last year, despite being dragged down by Sprint’s post-paid business. Stores have seen strong performance in digital converter boxes for the upcoming switch from analog to digital in the U.S. markets as well as GPS systems, AT&T post-paid business, and video games.

Estimates Are Up

The consensus estimates have been on the rise for the current quarter, next quarter, current year, and next year. The average increase for the previously mentioned periods is 15.5%, all within the last 90 days.

$200 Million Buy Back Program

On July 24th RadioShack also announced the approval of a $200 million buy back program.

Focusing Locally

RadioShack has reworked its retail management structure. The new plan will place an emphasis on local sales management through regional sales managers.

By focusing on sales at the store level, RadioShack will be able to provide more continuity between stores and a better over all experience for customers.

The company is also upgrading 4,000 stores nationwide. RadioShack will be able to complete most of the stores by the holidays. Improvements consist of more interactive displays for wireless and GPS products. In addition to upgrades, 14 stores will be completely remodeled.

The Chart

Shares of RSH had been in a bullish trend since the earnings announcement in late July. The stock as recovered nicely after setting its 52-week low during the summer, but have since sold off with the broader market. Take a look at the chart below.

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