HHGregg Earnings: Focused on a Turnaround, Shares Surge Over 10%

hhgregg, Inc. (NYSE:HGG) delivered a profit and met Wall Street’s expectations, AND came up short on beating the revenue expectation. The revenue miss is a negative sign to shareholders seeking high growth out of the company. Given hhgregg forewarned investors of lighter top-line and bottom-line estimates earlier this month, shares are up 10.96%.

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hhgregg, Inc. Earnings Cheat Sheet

Results: Net income decreased -22.69% to $17.38 million (52 cents per diluted share) in the quarter versus a net gain of $22.48 million in the year-earlier quarter.

Revenue: Decreased 3.61% to $799.6 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: hhgregg, Inc. reported adjusted net income of 52 cents per share. By that measure, the company met the mean analyst estimate of $0.52. It missed the average revenue estimate of $803.83 million.

Quoting Management: Dennis May, President and CEO commented, “As we announced in our pre-release, the difficult industry-wide video category trends presented a challenge to our sales and earnings. With the continued growth of our appliance business and the introduction of new categories, such as furniture and home fitness, we continue to reduce our reliance on both the video category and innovation in consumer electronics…

…Over time, we plan to continue to refine our mix towards large consumer home products, which include a greater mix of appliances, furniture, fitness equipment and other home products that leverage our consultative sales force, ability to deliver and install big box product, and our private label credit card. Video and consumer electronics remain important to us, but we plan to increase our focus on these other large home products.”

Key Stats:

Revenue increased 36.07% from $587.64 million in the previous quarter. Net income increased 362.23% from $3.76 million in the previous quarter.

Looking Forward: Analysts have a more negative outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has fallen from a profit of $0.41 to a profit $0.3. For the current year, the average estimate has moved down from a profit of $0.92 to a profit of $0.74 over the last ninety days.

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(Company fundamentals provided by Xignite Financials.)