The wild ride continues for shareholders of specialty retailer Sharper Image (NASDAQ:SHRP). In addition to plummeting sales, today the company announced a delay in its SEC 10-Q filing. It will also restate historical financials as a result of past stock-option measurement dates. Based on the current stock price, investors want nothing to do with the company. Is it time to be greedy while others are fearful?

Current news flow
In today's press release, management offered preliminary second-quarter results as it works through the restatements. It expects to report a sales decrease of 22%, to $107.2 million, on a 28% drop in same-store sales. It also is projecting a loss of $21.3 million, prior to any tax offsets from reporting a loss. In terms of balance-sheet info, the company had about $23 million on hand, with no long-term debt. Sharper Image also mentioned that inventories fell 25% to $30 million, as management struggles to manage inventory levels until sales turn around. Overall, these are pretty sad results.

As for the stock-option adjustments, Sharper Image plans to record a $15 million charge for the period from Jan. 31, 1998 to 2006. About $11 million of the total relates to fiscal 1998 and 1999, according to the company. As a result, Sharper Image plans to restate its financials for the three fiscal years ended Jan. 31, 2006, and for two quarters ended April 30, 2005 and 2006. It's another thorn in the company's side, but at least the issue has been quantified and doesn't seem major.

Putting it into context
Right now, it's very difficult to value the company's stock. Investors don't have recent financial statements with which to determine current earnings and cash flow trends, and there's no telling when sales will stop plummeting. Can we examine any other metrics?

Back in May, I detailed that the company was trading at a low enterprise value-to-sales ratio, or EV/S, of 0.24. It has since fallen to about 0.18, a very low number for a retailer. It's also trading at a low price-to-book value, or P/BV, of 0.86. The insights gained from a company's book value are limited, but the figure can still be useful in valuing a struggling company, since it offers insight on the way the market is valuing the company's net asset level as detailed on the balance sheet.

To put Sharper Image's numbers into context, here are some stats on other specialty retailing companies:

Company EV/S (ttm) P/B
Urban Outfitters (NASDAQ:URBN) 2.3 4.6
Pacific Sunwear (NASDAQ:PSUN) 0.7 2.2
Circuit City (NYSE:CC) 0.3 2.7
Best Buy (NYSE:BBY) 0.7 6.0
Pier One (NYSE:PIR) 0.4 1.2
Build-a-Bear (NYSE:BBW) 1.2 4.4
Source: Capital IQ, a division of Standard & Poor's.

Circuit City has the lowest EV/S, but it's in the midst of a successful sales turnaround after a couple of disastrous years. Pier One is in a similar situation to Sharper Image, experiencing its own current sales implosion. Both firms still have multiples greater than those of Sharper Image, indicating potential upside. For other comparisons, Best Buy is a very large company, but also the best-run of the above bunch, while Urban Outfitters, Pacific Sunwear, and Build-a-Bear have robust growth prospects but are experiencing their own growing pains. My overall take is that investors are currently leaving Sharper Image for dead.

Foolishness in sharper focus
With sales falling rapidly at Sharper Image, I think the current EV/S ratio shows that investors expect additional sales declines. Management must stabilize sales soon; otherwise, the EV/S ratio is may remain low or even fall further. P/B should remain relatively static, since plant and equipment account for the majority of Sharper Image's assets. Conditions are indeed grim at the company, but patient value investors could be duly rewarded if management can ever lead the company to a sales recovery.

For related Foolishness:

Pacific Sunwear and Best Buy are Motley Fool Stock Advisor recommendations. To see what other companies David and Tom Gardner have recommended to investors since 2002, click here for a 30-day free trial.

Fool contributor Ryan Fuhrmann is long shares of PacSun, but has no financial interest in any other company mentioned. Feel free to email him with feedback. The Fool has an ironclad disclosure policy.