Back to top

Analyst Blog

Shares of hhgregg, Inc. (HGG - Analyst Report) reached a new 52-week high of $19.41 on Aug 26 following impressive first quarter fiscal 2014 results announced last month.

Shares of this appliance and electronic retailer closed at $19.14 on Aug 26, recording a healthy return of 163.3% on a year-to-date basis. The company’s long-term estimated EPS growth rate is 14%. Average volume of shares traded over the last three months came in at approximately 299K.

Better-Than-Expected Results

On Aug 5, 2013, hhgregg reported a loss of 4 cents per share in the first quarter of fiscal 2014, narrower than the prior-year quarter loss of 16 cents per share. The reported loss was also narrower than the Zacks Consensus Estimate of 15 cents loss per share.

The narrower loss was driven by positive comps, cost savings and lower share count. Lower operating expenses contributed to the improved operating margins in the first quarter, which managed to offset the impact of a decline in gross margins.

hhgregg’s net sales beat the Zacks Consensus Estimate and climbed 7.2% year over year, driven by positive comps in the quarter and a turnaround from declines seen in the last few quarters. Moreover, the addition of 18 new stores in the last 12 months also boosted top line growth. Comparable store sales were backed by the strong performance of the appliance category.

The improved results in the first quarter of fiscal 2014 were due to several strategic initiatives taken up by the company. These initiatives mitigated the effects of the continued weakness in the consumer electronic category, which had been suffering since the past few quarters.

In order to improve overall comps and pull up the performance of the consumer electronics category, the company has developed three major initiatives for fiscal 2014. The company intends to increase market share of its appliance category, expand its customer base through advertising campaigns and focus on promoting consumer electronics through compelling offers. hhgregg also intends to increase category sales through its website capabilities.

Other Stocks to Consider

hhgregg holds a Zacks Rank #1 (Strong Buy). Other stocks in the retail sector that are performing equally well and are therefore worth considering include Kirkland Inc (KIRK - Analyst Report), Haverty Furniture Cos. Inc. (HVT - Snapshot Report) and Fortune Brands Home & Security (FBHS - Snapshot Report), all of them holding a Zacks Rank #1.

Please login to Zacks.com or register to post a comment.