Q4 Preview: Analysts Lose Hope in RadioShack (RSH) Following Preliminary Results

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Shares of Radioshack Corporation (NYSE: RSH) are set to close Friday's session up more than 5 percent ahead of the release of its fourth-quarter results before the opening bell on Tuesday, February 21st.

The Wall Street quarterly consensus for Radioshack Corporation is $0.12 per share in earnings on $1.39 billion in sales. During the fourth quarter of last year, the company reported earnings of $0.51 per share on $1.37 billion in total sales. Back on January 30, the company reported preliminary quarterly results of $0.11-$0.13 per share in earnings on $1.39 billion in sales.

The fourth quarter conference call is scheduled for 8:30 am ET on February 21st. The telephone replay will be available by calling toll-free (888) 286-8010 or by toll call at (617) 801-6888. The telephone replay passcode will be 94408578.

According to data from Bloomberg, shares of Radioshack Corporation have two Buy ratings, 15 Hold ratings and four Sell ratings. The average price target on shares of RSH is $9 with a range from $7 to $18.

Analyst Comments:

Deutsche Bank noted no good signs of a turnaround could be found in Sprint’s (NYSE: S) quarterly results for Radioshack.

An analyst at Deutsche commented, “We believe the biggest company specific risks for RSH to the downside include slowing growth in wireless, and lower margins from increased penetration of lower profitability products. To the upside, risks include stronger than expected rollout of the kiosk program, and the addition of Verizon and a favorable resolution to the Sprint situation.”

Deutsche Bank reaffirmed its Hold rating and $7 price target on the company ahead of the release.
Wedbush highlighted Radioshack is now looked at as the retailer of choice for low-cost devices. For the quarter, the firm forecasts earnings will total $0.11 per share on $1.393 billion in sales.

An analyst at Wedbush said, “In our view, RadioShack’s core business will continue to decline as most of its product offering is available elsewhere at low prices. Increasing competition from Best Buy on the mobile side will likely squeeze margin.”

Wedbush maintained its Neutral rating and $8 price target on the company going into the quarterly results.
KeyBanc estimates earnings will be at the top end of the company’s pre-announced results, but does suspect a 6 percent decline in gross margins.

An analyst at KeyBanc highlighted, “While we view the wireless strategy shift and the Verizon addition positively longer term, we see continued near-term risk in transitioning carriers as well as continued difficulties in other segments of the business.”

KeyBanc reiterated its Hold rating on the company ahead of the release.