Circuit City Raises Dividend; Bad Store, Great Stock?

Excerpt from today's Wall Street Journal annotated summary:

Circuit City Increases Dividend

• Summary: Circuit City Stores' board approved a plan to raise its quarterly dividend to $0.04 from $0.0175 and to boost its stock buy-back by $400 million to $1.2 billion.
• Comment on related stocks/ETFs: Circuit City's stock (CC) has significantly outperformed rival Best Buy (BBY). Circuit City's stores were so miserably managed that the company had ample room for improvement, while Best Buy is generally a far better managed company. This is a stark reminder that of the importance of the expectations and sentiment that are already priced-in to a stock, and the potential for upside surprises. CC and BBY one year chart below; click to enlarge:
  

Comments

[Faisal Laljee:]

I wouldn't be surprised if Circuit City decided to go private (like how Linens-n-Things did). There is only room for one Electronics retailer in my opinon and thats Best Buy. I do agree that with lower expectations and an almost bankrupt company some 4 years ago, Circuit City has done well to emerge a stronger player than people expected, but considering that Walmart, Target and Sears also have Electronics departments that take away business from Best Buy and Circuit City, I believe the stock has made most of its move.

-- Faisal Laljee

2006 Jul 02 06:08 AM

[Asif Suria:]

For years now I have been a fan of Circuit City stores and the stock, right from when it was trading at about $4 in early 2003 and before the $8 per share unsolicited bid from that Mexican family.

I have always found Circuit City to have better prices than Best Buy and quite clearly a much larger range of gadgets than Target or Walmart. The upcoming release of the Playstation 3 and Nintendo Wii combined with continued demand for flat panel HDTV TVs bodes well for Circuit City.

Disclaimer: I do not hold any positions in Circuit City.

2006 Jul 17 03:58 AM