RadioShack (RSH, Financial) reported disappointing second quarter results Tuesday morning, but its shares are soaring on an agreement to offer Verizon’s (VZ, Financial) wireless products and services within its 4,300 locations.
The technology retailer earned an adjusted $0.32 per share on $941.9 million in revenue during the quarter, coming nowhere near the consensus profit ($0.38 per share) or sales ($1.03 billion) estimates. Adjusted net income fell 38% year-over-year, while net sales declined 2.1%.
In a classic case of a company with stellar fundamentals finally grasping onto a catalyst, RadioShack’s shares are actually up significantly Tuesday morning on news of the Verizon agreement. The stock has underperformed the market recently despite outstanding margins and a ridiculously cheap valuation (see a great analysis here), so its a bit ironic that buyers are suddenly showing up just as the company puts up an ugly batch of numbers. Investors have been unable to look past the fact that no one goes out of their way to shop at RadioShack, but the Verizon deal is apparently earning it some well deserved attention. There’s certainly a lot to like – especially if you put your thumb over the company name and just focus on the numbers.
Aside from the Verizon deal, the brightest spot in this earnings release has to be the continuation of RadioShack’s aggressive share buybacks. The company repurchased 6.3 million shares on the cheap during the quarter, pushing its share count near (and possibly even below) 100 million for the first time. RadioShack had an average of 104.6 million fully diluted shares outstanding during the quarter… not bad for a company that had nearly 200 million shares outstanding at the turn of the century.
Shares of RSH opened Tuesday’s session trading at $15.10 (+15.36%), where they carry a 1.66% dividend yield. RadioShack, which pays its dividend in annual installments, has distributed $0.25 per share every year dating back to 2003. The company has yet to declare its 2011 dividend.
The technology retailer earned an adjusted $0.32 per share on $941.9 million in revenue during the quarter, coming nowhere near the consensus profit ($0.38 per share) or sales ($1.03 billion) estimates. Adjusted net income fell 38% year-over-year, while net sales declined 2.1%.
In a classic case of a company with stellar fundamentals finally grasping onto a catalyst, RadioShack’s shares are actually up significantly Tuesday morning on news of the Verizon agreement. The stock has underperformed the market recently despite outstanding margins and a ridiculously cheap valuation (see a great analysis here), so its a bit ironic that buyers are suddenly showing up just as the company puts up an ugly batch of numbers. Investors have been unable to look past the fact that no one goes out of their way to shop at RadioShack, but the Verizon deal is apparently earning it some well deserved attention. There’s certainly a lot to like – especially if you put your thumb over the company name and just focus on the numbers.
Aside from the Verizon deal, the brightest spot in this earnings release has to be the continuation of RadioShack’s aggressive share buybacks. The company repurchased 6.3 million shares on the cheap during the quarter, pushing its share count near (and possibly even below) 100 million for the first time. RadioShack had an average of 104.6 million fully diluted shares outstanding during the quarter… not bad for a company that had nearly 200 million shares outstanding at the turn of the century.
Shares of RSH opened Tuesday’s session trading at $15.10 (+15.36%), where they carry a 1.66% dividend yield. RadioShack, which pays its dividend in annual installments, has distributed $0.25 per share every year dating back to 2003. The company has yet to declare its 2011 dividend.
