RSH

Best Buy’s Performance Continues to Tumble

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Electronics retailer Best Buy (click ticker for report: ) announced weak third quarter results Tuesday morning. Revenue dipped 3.5% year-over-year to $10.8 billion, roughly in-line with consensus estimates. Earnings, adjusted to reflect continuing operations, dropped 94% year-over-year to $0.03 per share, which was worse than consensus expectations. Perhaps the most encouraging parts of the report came from the headline and CEO Hubert Joly’s remarks. The company showed its sense of frankness with the headline, “Best Buy Confirms Significant Decline in Fiscal Third Quarter 2013 earnings.” Further, Joly stated: “In line with trends experienced over the last three years, Best Buy’s third quarter financial performance was clearly unsatisfactory. On November 13, we shared our candid assessment of Best Buy’s situation and … Read more

Putting Our Fair Value Estimate of RadioShack Under Review

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RadioShack (RSH) announced after the close today that its fourth-quarter results would come in below our expectations due in large part to the underperformance of its Sprint postpaid wireless business. We plan to re-evaluate RadioShack’s position within the consumer electronics industry and expect to lower our fair value materially. We will publish an updated report shortly. << RadioShack’s press release

Understanding Share Buybacks

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Image Source: Mike Mozart This article is for educational purposes only and may not reflect our updated opinion on any companies mentioned. Rule of Thumb: If share buybacks are completed at a price level that is under a firm’s fair value estimate, the activity can be considered value-creating. If share buybacks are completed at a price level that is above a firm’s fair value estimate, they can be considered value-destroying. By Brian Nelson, CFA Share buybacks are not always a “good thing.” The general rule of thumb may be that share buybacks reveal that management believes its stock is underpriced and that the executive team thinks there may be no better investment opportunities out there with firm money than its very own company … Read more