RadioShack - A Value Stock Buy

RadioShack Corporation (RSH) reported second-quarter results on July 27 that surprised by 10 cents, or 34.48%.

Earnings per share rose 7 cents to 39 cents from 32 cents in the year ago period. The Zacks Consensus Estimate called for 29 cents.

Net sales fell 2.9% to $965.7 million compared with $994.9 million for the year ago period. The decline was primarily due to a 4.6% decrease in sales generated by company-operated stores, a 3.2% decrease in kiosk sales, and an 18.8% increase in other sales.

Same-store sales declined 4% compared to a year ago. Sales declined in wireless accessories, digital-to-analog converter boxes, GPS products, music players and digital cameras. However, sales of netbooks, television antennas, prepaid wireless handsets, digital televisions and Voice over Internet Protocol Products rose.

Inventories fell by $48.1 million over the year ago period.

The company also grew its cash and cash equivalents to $930.8 million at the end of the quarter from $577.8 million as of June 30, 2008.

Zacks Consensus Estimates Rise

Following the estimates surprise, covering analysts moved to revise third quarter and full year estimates.

The third-quarter Zacks Consensus Estimates rose 3 cents to 31 cents in the last week with 11 out of 16 covering analysts raising.

15 out of 17 analysts also raised for the full year as the 2009 Zacks Consensus Estimate jumped 15 cents to $1.54 per share.

Value Fundamentals

RadioShack was a Zacks #1 Rank (strong buy) stock when I last reviewed it on May 29 and is now a Zacks #2 Rank (buy) stock.

It is still an attractive value stock, with a forward P/E of 10.03. It has an outstanding 1-year return on equity (ROE) of 23.84%.

As an added bonus, the company pays a dividend, with a current yield of 1.60%.

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