New York, July 17 (FinanceEnquiry.com) – Analyst Mike Baker at Deutsche Bank Securities reports on Retailing or Hardlines.
In a research note published on July 16, the analyst mentions that three companies, namely RadioShack Corp (NYSE: RSH), O’Reilly Automotive Inc (NASDAQ: ORLY) and Tractor Supply Co (NASDAQ: TSCO) will be reporting on July 25 wherein the first one would be reporting before the market gets opened, while the latter two would be reporting after the closing of market. Including O’Reilly Automotive, whose pre-announcement is already a miss, expectations with the other two companies are also low.
Nevertheless, on low expectations, Tractor Supply is impressive enough. As weather into 1Q12 has helped last quarter, however, is expected to hurt 2Q12, a pull forward in demand is probable and this view has been established on the commentary of vendor and competitor. As compared to last quarter’s comps of 11.5 percent, essentially, comps are predicted to be in the range of 3.5 percent. Comps in the area of 4 percent are also believed to be widely expected. Reiterating BUY rating for the company, full year guidance that laid marginally below the current consensus, is expected to be maintained, however, to finally be beatable on better 2H12 trends.
If focus is poured on O’Reilly Automotive then it would be found that with comps in the 2 percent to 2.5 percent range and EPS at the low end of its previous guidance of $1.13 to $1.17, a weak 2Q12 has been pre-announced by ORLY. The 3Q12 and full year guidance will now be highly important. The stock of the company might get stabilized if deceleration in 2Q12 from 7.4 percent in 1Q12 gets demonstrated to be highly related with the weather. Even though the benefit of 2Q12 buybacks that are not in the current guidance, would be there, still, due to the weakness of 2Q, updation of ORLY’s full year guidance of $4.47 to $4.57 would not be of much surprise. HOLD rating has been reiterated for the company.
Now, moving towards RadioShack Corp, it could be said that using the EPS estimate of $0.02 against the consensus of $0.04, expectations are quite low with the company. Despite a very easy comparison, sales estimate also laid behind the consensus. Moreover, cash flow of the RSH and its ability to keep on paying its dividend of about $50 million a year are believed to be some of the important points to watch.
The dividend payout is supposed to be quite achievable as last quarter was ended by the company with $566 million in cash and now it is assumed to generate about $17 million in free cash flow in 2012. HOLD rating has been reiterated for RadioShack Corp also, the analyst adds further.
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