Turnarounds are tricky situations -- especially in retail. It's not easy to draw customers back to a store that's already turned them off. When you consider the stock market implications, you also have to deal with the fact that some folks will have such low expectations that almost anything will look like improvement. Accordingly, I'm not sure just how excited anybody should be about where Pep Boys (NYSE:PBY) is these days.

The auto parts retailing and service specialist saw overall revenue rise more than 1% this quarter. Same-store sales were down almost 1%, though, with retail sales down 3% and service sales up 2.2%. Although management seemed impressed with this "improvement" in the service business, I'm not so sure. After all, if you factor in this quarter's growth with the year-ago quarter's decline, you're basically looking at a standstill. Sure, that's better than a drop, but it's hardly cause for celebration.

The earnings picture is similarly cloudy. It was good to see improvements in gross and operating margins, but the level of operating profitability is still quite weak. Even granting that AutoZone (NYSE:AZO), Advance Auto Parts (NYSE:AAP), and O'Reilly Automotive (NASDAQ:ORLY) aren't entirely fair comparisons, Pep Boys isn't even in the same zip code in terms of profitability. Though the company is clearing its interest obligations on a cash flow basis, it's clear that there's a long way left to go.

The good news is that the company is not likely to go bankrupt, and if it can produce a little more sequential improvement, it just might bottom out. On the other hand, the strategies that management is trying to implement are not quick fixes; they'll take several quarters, if not years, to really bear fruit.

I might be tempted by these shares if they were trading closer to the tangible book value of the company, but I'm not going to pay much of a premium to that level. This is a highly competitive retail sector, and I'm not about to take on outsized risks without getting an outsized bargain in return.

Philip Durell tapped AutoZone for Motley Fool Inside Value subscribers. Find out which other undervalued companies Philip sees potential in by taking a free, 30-day trial. There's never an obligation to buy.

Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).