Systemax Inc. (SYX) has resurrected some well known retail brands like Circuit City through e-commerce sites which is boosting the company’s bottom line. SYX is trading at 12.3x forward earnings.
Company Description
Systemax is a retailer of industrial and technology products through e-commerce websites, catalogs, retail stores and direct sales representatives.
In technology products, it markets under the brand names of TigerDirect, Circuit City, CompUSA and Global Computer Supplies in the United States and MISCO and WStore in Europe.
In industrial products, Systemax sells wire and metal shelving, bins and lockers, hand carts, ladders, furniture, small office machines and first aid and safety items.
Systemax Reports Record Fourth Quarter Sales
On Mar 8, Systemax reported a stellar quarter that saw sales rise 15% to an all-time record of $938.2 million. There was one less week in the quarter in 2009 so adjusting for the shorter time period, sales would have risen 24%.
Consumer channel sales rose 18% and business channel sales jumped 34%, adjusting for the extra week.
The company surprised on the Zacks Consensus Estimate by 35.29% or 12 cents. It was the second surprise in a row. Earnings per share were 46 cents compared to 27 cents for the year ago period.
Systemax attributed the record sales to the impact of the WStore acquisition in Sep 2009 as well as improving economic conditions in some of the geographies it serves.
Consumer sales were boosted by the asset purchase of Circuit City in May 2009 and a robust holiday season that had consumers shopping for lower priced items such as netbooks, digital cameras and smaller flat screen televisions.
Balance Sheet
Systemax had working capital of $252.5 million, including cash and cash equivalents of $58.3 million as of Dec 31, 2009. Cash was drawn down on the year due to the Circuit City asset purchase and the WStore acquisitions.
The company also had an undrawn credit facility of $120 million as of the end of 2009.
Short term debt equaled $15.2 million as of Dec 31, 2009. This included $14.2 million in revolving debt assumed as part of the WStore acquisition as well as capitalized lease obligations.
Zacks Consensus Estimates Climb
Given the stellar quarter and general bullishness of the company, analysts have been moving to raise estimates.
The first quarter Zacks Consensus Estimate jumped 13 cents to 40 cents over the last 30 days.
For the full year, the Zacks Consensus jumped 21.7% to $1.75 from $1.43 per share in the last 30 days as 2 estimates moved higher in that time period.
Analysts expect earnings per share to grow 42.28% in 2010.
Value Fundamentals
Systemax is a Zacks #1 Rank (strong buy) stock. It has a a price-to-book ratio of just 2.2 which is in the value parameters of under 3.0. The company also has a stellar 5-year average return on equity (ROE) of 15.6%.
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service.
