KeyBanc Upgrades RadioShack (RSH) to Hold

October 27, 2009 7:53 AM EDT

KeyBanc upgrades RadioShack (NYSE: RSH) from Underweight to Hold.

KeyBanc analyst says, "Following the 3Q09 EPS release yesterday, we are upgrading our rating on shares of RadioShack to HOLD. RSH reported 3Q09 EPS below consensus, as we warned, but better than our forecast due to improving wireless sales. We are encouraged by the improving sales trends, but believe the gross margin and SG&A outlook may still be somewhat more limited. Still, the Company is a strong cash-flow generator, valuation is inexpensive, and we believe downside is limited. We are upgrading shares of RSH to HOLD and raising our 2009 EPS estimate from $1.48 to $1.54. Our 2010 EPS estimate of $1.60 remains unchanged...We expect the Company to generate more than $180 million in free cash flow in 2009, representing an 8% FCF yield. RadioShack also recently tendered $43.2 million of its $350 million 7.375% notes, which we expect to benefit EPS by nearly $0.02 annually through lower interest expense. Furthermore, the Company has $290 million remaining on its buyback authorization, following the increase of $200 million. No shares have been repurchased in 2009, and we believe the Company is likely to resume share repurchase once its blackout period is over. We are encouraged by management's efforts to use cash opportunistically to benefit shareholders."

To see more analyst ratings on RSH Click Here.

RadioShack Corporation engages in the retail sale of consumer electronic goods and services, through its RadioShack store chain and non-RadioShack branded kiosk operations, in the United States and internationally.

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