1) Investors have pushed HGG value below the 282M in inventory that stood on the books at the end of March. Add the fact that HGG also has roughly 60M in net cash, and the valuation gap becomes especially amazing.
2) 359M tangible book value for HGG is 59% higher than the market cap of 227M
3) Adding more stores is a smart move because of the Web Sale Tax that will be applied on Amazon by the House next week.
4) unlike Circuit city , HGG has a policy of not taking debt for growth.
5) BBY put Circuit City (CC) out of business because CC had large debt. HGG is replacing CC stores only in prime locations because BBY has reputation of bad customer service. HGG will not end up in BK because it has 58 years policy of avoiding debt.
6)Even after the warning, HGG expects to have about $1 EPS for its fiscal year 2013.
7) Insiders hold 54% of outstanding shares and the tiny float of 16M shares could be big trouble for shorts next week.
8) 32% of HGG revenues is from service and repair which cant be provided by Amazon and other online stores.
9) HGG is extremely oversold after 10 days of 50% meltdown .
10) Earning report on 8/2 could bring good news.
11) At 220M cap, HGG is a take over target by HD , BBY or Low's.
12) 50% meltdown is absolutely not justified for just 12% rev reduction.
13)HGG is totally different than Circuit City and the online stores are losing their unfair sales tax advantage by the congress this week
14)The large short ratio of 51% of float will fuel a big rally soon.
From an extremely successful news letter (7/29/20120
<<Based on my analysis I believe that HGG is still undervalued at the market price of $6.8 per share. All income based methods indicate that the firm as a potential upside of between 28% and 54%, excluding any potential catalysts or extraneous events that could boost the stock.>>
Here's one not to: from current 8-k "The Company expects a net loss of between $6.2 million to $5.7 million, or $0.17 to $0.16 per diluted share, for the first quarter of fiscal 2013..." Be wary of too enthusiastic boards.
1)While hhgregg competes with Best Buy on sales of flat-panel televisions and computers, hhgregg places a much stronger emphasis on appliances and mattresses than Best Buy. They account for 36 percent of total sales; appliances account for about 5 percent of Best Buy’s sales.
2) Unlike Best Buy, hhgregg employees are paid on commission reducing its employee cost.