RadioShack Corp. (NYSE:RSH) is set to report FQ1 2014 earnings before the market opens on Tuesday, June 10th. The franchiser of electronics retail stores has been struggling lately, posting losses in each of the past 8 quarters. In March, shares sank 20% after RadioShack announced that it would be closing 1,100 stores - nearly 26% of its total. Last quarter was particularly disastrous for shareholders because of the magnitude by which RadioShack missed estimates. The company reported a loss of -$1.29 per share while Wall Street had forecast -16c. This quarter, expectations have been lowered significantly and the Street is preparing investors for a quarterly loss of -52c per share. Here’s what investors are expecting from RadioShack on Tuesday.
The information below is derived from data submitted to the Estimize.com platform by a set of Buy Side and Independent analyst contributors.
The current Wall Street consensus expectation is for RadioShack to report -52c EPS and $756.45M revenue while the current Estimize.com consensus from 17 Buy Side and Independent contributing analysts is -81c EPS and $736.82M in revenue. This quarter, the buy-side as represented by the Estimize.com community, is expecting RadioShack to miss the Wall Street consensus on both the top and bottom line by a wide margin.
Over the previous 4 quarters for which data is available, the consensus from Estimize.com has been more accurate than Wall Street in forecasting RadioShack’s EPS in each quarter and revenue 3 times. By tapping into a wider range of contributors including hedge-fund analysts, asset managers, independent research shops, students, and non professional investors Estimize has created a data set that is more accurate than Wall Street up to 69.5% of the time.
More importantly it does a better job of representing the market’s actual expectations. It has been confirmed by Deutsche Bank (NYSE:DB) Quant. Research and an independent academic study from Rice University that stock prices tend to react with a more strongly associated degree to the expectation benchmark from Estimize than from the Wall Street consensus.
The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. Here we are seeing a larger than usual differential between the two groups’ expectations, especially on the predicted quarterly loss.
The distribution of earnings estimates published by analysts on the Estimize.com platform range from -$1.76 to -47c per share and from $645.00M to $768.23M in revenues. This quarter we’re seeing a huge range of estimates on RadioShack’s expected quarterly loss.
The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A wide range of estimates signals less agreement in the market, which could mean greater volatility post earnings.
Throughout the quarter there were converging expectations from Wall Street and the Estimize community. Wall Street brought down its EPS consensus from -38c to -52c while the Estimize consensus increased from -$1.18 to -81c. Meanwhile the Wall Street revenue forecast slid from $824.35M to $756.45M while the Estimize sales consensus rose from $681.68M to $736.68M. Timeliness is correlated with accuracy and expectations from the two groups continued to converge going into the report.
The analyst with the highest estimate confidence rating this quarter is jasonkaplan who projects -62c EPS and $750.00M in revenue. jasonkaplan is the highest rated overall among over 4,500 contributing analysts. This season jasonkaplan has been more accurate than Wall Street in forecasting EPS and revenue an impressive 73% and 57% of the time respectively throughout 164 estimates.
Estimate confidence ratings are calculated through algorithms developed by deep quantitative research which looks at correlations between analyst track records and tendencies as they relate to future accuracy. In this case jasonkaplan is expecting RadioShack to miss the Wall Street consensus, but does not expect nearly as bad of a report as the Estimize.com community is predicting.
RadioShack has been struggling lately, and the broader weakness in retail sales has certainly not helped. After a dismal quarterly report in March, the bar has been set much, much lower for the upcoming quarter. RadioShack has been a player in the electronics industry for nearly 100 years, but if the company’s financial performance continues to go as poorly as it has lately, the prospects for a turnaround will start to come into question.
Get access to estimates for RadioShack published by your Buy Side and Independent analyst peers and follow the rest of earnings season by heading over to Estimize.com. Register for free to create your own estimates and see how you stack up to Wall Street.