Pep Boys Manny Moe & Jack Earnings: Higher-Than-Expected Net Income

Pep Boys Manny Moe & Jack (NYSE:PBY) reported net income above Wall Street’s expectations for the second quarter. Pep Boys Manny Moe & Jack is engaged mainly in automotive repair and maintenance and in the sale of automotive tires, parts, and accessories through a chain of stores.

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Pep Boys Manny Moe & Jack Earnings Cheat Sheet

Results: Net income for Pep Boys Manny Moe & Jack rose to $33 million (61 cents per share) vs. $13.9 million (26 cents per share) in the same quarter a year earlier. This is a more than twofold rise from the year-earlier quarter.

Revenue: Rose 0.6% to $525.7 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Pep Boys Manny Moe & Jack beat the mean analyst estimate of 15 cents per share. It fell short of the average revenue estimate of $543.6 million.

Quoting Management: “We continue to be rewarded by our strategy to lead with our service business, which grew 3.8% on a comparable store sales basis and experienced an impressive 7.8% customer count increase,” said President and Chief Executive Officer Mike Odell. “A strong July, particularly in our service business, allowed us to record flat comparable sales during the quarter. While industry fundamentals remain solid over the long term, with consistent demand for maintenance and repair services, short-term headwinds, including the recent spike in gas prices, continue to challenge consumer spending relative to discretionary and deferrable purchases. To combat these headwinds, we continue to make it easy for customers to choose us to do it for them and to expand our online efforts to make Pep Boys the most convenient place to shop for all of their automotive needs.”

Key Stats:

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins, as gross margin fell one percentage points to 24.8% from the year-earlier quarter. In that span, margins have contracted an average of 1.7 percentage points per quarter on a year-over-year basis.

Revenue has risen the past four quarters. Revenue increased 2.2% to $524.6 million in the first quarter. The figure rose 5.9% in the fourth quarter of the last fiscal year from the year earlier and climbed 5.2% in the third quarter of the last fiscal year from the year-ago quarter.

The company beat estimates last quarter after being in line with expectations in the first quarter with net income of 2 cents per share.

Looking Forward: The outlook for the company’s results in the upcoming quarter is unfavorable. The average estimate for the third quarter is 16 cents per share, down from 21 cents ninety days ago. For the fiscal year, the average estimate has moved down from 95 cents a share to 58 cents over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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