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Ugly Radio Shack Has Beautiful Bones

RSH certainly has its work cut out for it, but the buzzards have stopped circling, at least for now. The company currently trades for 1.38 times net current asset value, an extremely depressed valuation, and .68 times tangible book value per share. While there was ample cash at the end of the first quarter, $435 million or $4.36 per share, that will probably continue to decline as the company attempts to right-size itself. There is also ample debt, $712 million, which will need to be addressed.

RSH Long Term Debt Chart RSH Long Term Debt data by YCharts

I expect that we'll learn more about the progress of Joe Magnacca's "100 day plan" when the company reports second-quarter earnings next month. Consensus expectations appear to be fairly low, with revenue of $814.7 million, a 22% decline from last year, and a loss of 23 cents per share.

This ugly duckling has performed very well so far this year, and has shown some progress, but there is still much work to be done.

At the time of publication the author is long RSH.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Jonathan Heller, CFA, is president of KEJ Financial Advisors, his fee-only financial planning company. Jon spent 17 years at Bloomberg Financial Markets in various roles, from 1989 until 2005. He ran Bloomberg's Equity Fundamental Research Department from 1994 until 1998, when he assumed responsibility for Bloomberg's Equity Data Research Department. In 2001, he joined Bloomberg's Publishing group as senior markets editor and writer for Bloomberg Personal Finance Magazine, and an associate editor and contributor for Bloomberg Markets Magazine. In 2005, he joined SEI Investments as director of investment communications within SEI's Investment Management Unit.

Jon is also the founder of the Cheap Stocks Web site, a site dedicated to deep-value investing. He has an undergraduate degree from Grove City College and an MBA from Rider University, where he has also served on the adjunct faculty; he is also a CFA charter holder.

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