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RadioShack AO Message Board

  • booleansearcher booleansearcher May 4, 2013 11:31 AM Flag

    presently assessing this stock - spoke 2

    a local store manager and he said it is looking better and they like the new initiatives - they don't have to strangle the person when they walk in the store anymore with all kinds of phone deals etc -- "it scared people off"........"they don't like that stuff". SO TRUE.
    Also watch my little ntn buzztime next week -- see if they are doing better in places like Buffalo Wild Wings and other stores -- new games should be doing better. Still high risk of course at some 35 cents or so.
    The shack looks like it has some good money and book value - any info on that???? Will do own dd but pertinent info will be appreciated. Boolean

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    • Ending radio shacks hostility toward it's customers may help but so much damage has been done over the years, that allowed competition to take "or was it given!" market share.

    • TAKE A READ..

      davebu109 davebu109 • May 3, 2013 9:42 AM Flag1 users liked this posts users disliked this posts 1 Reply Radio Shack: Goldman Cuts to Sell, Little Equity Value
      Radio Shack: Goldman Cuts to Sell, Little Equity Value
      RSH is the most levered firm within our coverage universe, and the equity valuation currently reflects some optionality on the potential for turnaround. We believe that a turnaround will be exceptionally difficult to implement and correspondingly apply a low probability of success. RSH trades at abnormally high multiples, the highest in our space, on rent-adjusted EBITDAR, we believe, reflecting the possibility of a best-case scenario. We do acknowledge that recent financing, and the opening of credit markets in general, have bought RSH time to implement change. We believe that additional time, and management focus, will be insufficient to achieve a best-case scenario, reflecting higher profitability. For RSH to trade at a reasonable multiple to EBITDA or EBITDAR, these metrics would have to increase 4-5x. We don’t find much equity value in our bear-case or base-case scenarios.

      Radio Shack may see liquidity troubles next year, he thinks:

      RSH’s rent-adjusted debt to EBITDAR ratio is over 9X, and the fixed charge coverage, at 1.0X is the lowest in our peer group. The capital market currently remains open for RSH, but at a cost. The working capital structure, in which there are approximately offsetting payables and receivables with key vendors, provides some insulation against an immediate liquidity issue. But we believe negative cash flows will pressure liquidity as we progress into 2014 and note that in our downside scenarios, cash could be materially eroded, or exhausted, by year-end 2014.