Does a Strong 2012 Mean a Stronger 2013 for hhgregg, Inc. (HGG) and More?

Currently expectations are embedding 36% EPS improvement and nearly 130% EBITDA growth in 2013 for RadioShack. Initially, the figures sound unreasonable, but given the weakness in 2012, as well as the margin benefit beginning in April after exiting the Target business, the figures could be attainable with relatively stagnant top-line, flattish core gross margins, and about a 4% reduction in operating expenses and depreciation & amortization. While that makes numbers seem much more feasible, little earnings visibility is currently seen, given:

1. Weaker wireless trends in 2012

2. Continued margin pressure due to promotional activity to drive that business, as well as mix shift

3. Continued declines in consumer electronics categories.

Therefore, the Street has constantly been lowering the estimates for future earnings.

Foolish Bottom Line

It is clear that despite a strong 2012, some of the retailers might not be able to meet the expected estimates in 2013 given a constant pressure on their margins as well as abnormally higher expectations.

The article Does a Strong 2012 Mean a Stronger 2013 for These Stocks? originally appeared on Fool.com and is written by Masam Abbas.

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