hhgregg, Inc.: I want my HDTV

American consumers are in love with cutting-edge electronics and appliances to enhance their lifestyles. Witness the crowds that piled into stores at the wee hours of Nov. 23, “Black Friday,” through closing time on Christmas Eve.

Heightening the demand for big-screen, flat-panel televisions is the coming age of high-definition television and the switch to digital from analog signals in February 2009.

Despite the potential potholes in a field crowded with some better-known competitors, Midwest chain hhgregg, Inc. (NYSE: HGG) decided to make the leap and became a public company last summer.

The competition among big-box retailers is intense, forcing stores to slice their profit margins razor thin. In addition to sector leaders Best Buy Co., Inc. (NYSE: BBY) and Circuit City Stores, Inc. (NYSE: CC), along with home-improvement chains like The Home Depot, Inc. (NYSE: HD) and Lowe’s Companies, Inc. (NYSE: LOW), there are thousands of independent retailers that are struggling to survive.

For hhgregg, it was a long journey to the New York Stock Exchange for a family-operated company that began selling appliances in its hometown of Indianapolis in 1955. Not limiting its product mix to what can be found elsewhere, hhgregg targets customers who want competitive prices on higher-end goods, ranging from electronics and appliances to office equipment and Serta bedding.

Now a chain of 84 stores, hhgregg reported $1.1 billion in sales, earnings per share of $0.73 and same-store sales growth of 5.5% for its 2007 fiscal year. Unlike many other retailers, hhgregg boasts a mostly full-time sales force that works on commission.

As a result, analysts covering hhgregg mostly offer favorable opinions about its potential. In a Thomson Financial tally of six analysts, five have hhgregg at “buy” or “strong buy,” with a median price target of $19.25. On Thursday, hhgregg closed at $13.41.

For access to the full article, you must be a registered member - it's FREE.

Already a member? Please log in below