Cars and Drivers
Is Buyout of Pep Boys Going Bad? (PBY, AZO, ORLY)
Published:
Last Updated:
On April 26th, Gores Group LLC asked Pep Boys – Manny, Moe & Jack (NYSE: PBY) to delay a special shareholders meeting by 30 days in order to give the private equity firm time to figure out what has caused the auto parts dealer to turn in such awful numbers for the first quarter. Gores had likely seen the writing on the wall that Pep Boys revealed to the rest of us today.
In a preliminary report on first quarter results, Pep Boys projected revenues of $524-$526 million, sharply lower than the consensus estimate of $558.3 million and EPS in the range of flat to $0.04. In the same period a year ago, Pep Boys showed revenue of $5.135 million and EPS of $0.23. The company had only this to say this morning: “[F]irst quarter results were below expectations due to a variety of factors occurring in the ordinary course of business.”
Competitors Autozone Inc. (NYSE: AZO) and O’Reilly Automotive Inc. (NASDAQ: ORLY) had no such “factor” to report during the first quarter as both handily beat expectations. So what’s up with Pep Boys and the Gores takeover at $15/share?
One analyst told Bloomberg News that Gores was aware of the possible downturn in Pep Boys’ business in January when the acquisition was being discussed:
There is no way [Gores] can pretend that this wasn’t what was represented by management. They will have a tough time getting out of the deal because “they already revised the offer because of recent performance,” [the analyst] said.
But if Gores really has cold feet about the deal and can wangle a way out of it, even temporarily, Pep Boys’ shareholders may not like the results.
Shares of Pep Boys are down about -24% at $11.35 in mid-afternoon today, within a 52-week range of $8.18-$15.46.
Paul Ausick
Is Your Money Earning the Best Possible Rate? (Sponsor)
Let’s face it: If your money is just sitting in a checking account, you’re losing value every single day. With most checking accounts offering little to no interest, the cash you worked so hard to save is gradually being eroded by inflation.
However, by moving that money into a high-yield savings account, you can put your cash to work, growing steadily with little to no effort on your part. In just a few clicks, you can set up a high-yield savings account and start earning interest immediately.
There are plenty of reputable banks and online platforms that offer competitive rates, and many of them come with zero fees and no minimum balance requirements. Click here to see if you’re earning the best possible rate on your money!
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
