RadioShack Earnings: An Early Look

Earnings season is now starting to wind down, with most companies already having reported their quarterly results. But there are still some companies left to report, and RadioShack (NYSE: RSH  ) is about to release its quarterly earnings. The key to making smart investment decisions with stocks releasing their quarterly reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

The woes of big-box electronics stores over the past several years has gotten a lot of attention, but even small-store format retailer RadioShack has gone through difficulties as it tries to find a viable niche for itself in a changing retail environment. Let's take an early look at what's been happening with RadioShack over the past quarter and what we're likely to see in its quarterly report on Tuesday.

Stats on RadioShack

Analyst EPS Estimate

($0.05)

Year-Ago EPS

$0.12

Revenue Estimate

$1.36 billion

Change From Year-Ago Revenue

(1.6%)

Earnings Beats in Past 4 Quarters

0

Source: Yahoo! Finance.

Will RadioShack pick up a signal this quarter?
Analysts have improved their view on RadioShack over the past few months, raising their consensus earnings call for the just-finished quarter by a penny per share and boosting EPS for full-year 2013 by $0.04. Yet what's really shocking is just how strong the stock has been lately, with shares up more than 60% since mid-November.

RadioShack has had difficulty coming up with a viable identity as a business. On one hand, its small stores have no hope of competing against Best Buy (NYSE: BBY  ) in stocking the high-end products that the big-box retailer relies on for its sales. On the other hand, Internet-based sales of electronics has given Amazon.com (NASDAQ: AMZN  ) a huge edge over both RadioShack and Best Buy, leaving customers with far fewer reasons to venture into RadioShack stores.

RadioShack's attempts to redefine itself haven't produced the results that investors had hoped to see. Last month, the company ended a partnership with Target (NYSE: TGT  ) involving in-store Target Mobile operations that RadioShack managed. Target went with two private companies instead, hoping to boost its own fortunes in mobile and leaving RadioShack to go back to the drawing board in trying to emphasize its own mobile offerings.

But a lot of the enthusiasm about the stock is coming from the arrival of new CEO Joseph Magnacca, a turnaround specialist who managed to help a struggling drugstore chain recover. Magnacca doesn't have an electronics background, but investors hope that the lessons he learned at Duane Reade will apply to his work at RadioShack as well.

In RadioShack's quarterly report, Magnacca needs to outline a viable strategy for the company going forward. Yet even with his best efforts, it's hard not to see Amazon as having more promise both as a company and as an investment.

Amazon may be crushing RadioShack and other electronics retailers, but is its sky-high valuation luring in investors at a bad time? We'll tell you what's driving the company's growth and fill you in on reasons to buy and reasons to sell Amazon in our Motley Fool premium report. We'll also be providing a full year of free analyst updates to keep you informed as the company's story changes, so click here now to read more.

Click here to add RadioShack to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.


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