Why Pep Boys' Shares Got Crushed

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of car parts supplier Pep Boys (NYSE: PBY  ) fell 14% today after announcing third-quarter results.

So what: Revenue fell 2.4% to $509.6 million, well short of the $527.8 million estimate analysts had made. On the bottom line, the company lost $6.8 million, or $0.13 per share, after making a $7 million profit a year ago. On an adjusted basis, the company made a $0.12 profit, but analysts had expected a profit of $0.15 per share.

Now what: The big problem is that same-store sales fell 2.7% in the quarter, a sign that any retailer is struggling. This is the fourth straight quarter that Pep Boys has missed estimates, which has investors losing faith in the company. Until revenue and profits are heading in a positive direction, I don't see a reason to buy this stock.

Interested in more info on Pep Boys? Add it to your watchlist by clicking here.


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