Circuit City Connects with Wall Street
Circuit City Stores (CC) stock gained on Sept. 20, after news that the Richmond, Va.-based consumer electronics retailer had higher than expected earnings amid growing sales.
Circuit City said it had 6 cents earnings per share (EPS) during the second quarter ended August 31, 2006, compared to a penny EPS during the same period last year. Net sales grew 11%, selling, general and administrative expenses declined, and profit margins remained stable.
"We are particularly pleased with our results, given the mixed macroeconomic signals and aggressive competitive environment during the quarter," said Philip J. Schoonover, chairman, president and chief executive officer of Circuit City Stores, Inc.
Investors took the news positively, bidding up Circuit City's stock nearly 0.5% to $26.42 per share on the New York Stock Exchange.
Standard & Poor's noted that the company had double-digit growth in flat-panel TV sales, following six straight quarters of triple-digit gains. "November quarter sales remain strong, which bodes well for holiday season," S&P analyst Marie Driscoll said in an afternoon research note Sept. 20.
But she warns that Circuit City is preparing for ongoing flat-panel strength, which could result in unhappy customers. She kept her 12-month target price at $30 per share and maintained a hold rating on the stock. (S&P, like BusinessWeek.com, is owned by The McGraw-Hill Companies.)