Mannie, Moe and Slack?

NEW YORK (TheStreet) - Today will likely be a difficult trading day for auto-repair company Pep Boys - Manny, Moe & Jack (PBY), which put up worse-than-expected third-quarter numbers following yesterday's market close.

Revenue, expected to be $540 million, came in at $525.7 million, and earnings per share of 10 cents were below the 19 cent consensus estimate. Shares fell 7% in after-hours trading.

It's been a difficult couple of years for this company, which at times has appeared to be attractive as a value play. Pep Boys exchanged hands for more than $35 a share back in 1996, and it has been a roller-coaster ride ever since.

The company long paid cash dividends, but that ended in 2012. The same year, the company was set to be acquired by Gores Group for $15 a share, which I believed at the time to be a steal for Gores. But the following May, Gores got cold feet; scared by Pep Boys operating performance, and walked away from the deal. In turn, Pep Boys walked away from that broken deal with a $50 million breakup fee, which allowed it to reduce debt to the $200 million range where it now stands. PBY Chart PBY data by YCharts

With headquarters in Philadelphia, Pep Boys is a well-known regional player in the auto-repair and auto-parts retail sector, with 750 locations in 35 states and Puerto Rico. The heaviest concentration of stores is in California (131), Florida (91), Texas (57), Pennsylvania (55), Georgia (49), New Jersey (40), Alabama (38), New York (37), and Illinois (35), with those eight states representing more than 70% of total stores. I've frequented our local Pep Boys often over the years, and it is one of the few places that will accept used motor oil from those of us weekend grease monkeys who still enjoy changing our own oil.

From a value perspective, one of the company's compelling factors has been its owned real estate. At year-end 2012, Pep Boys owned 232 locations, a 300,000 square-foot corporate headquarters and more than 1.4 million square feet of warehouse space in Georgia, Texas, Indiana, and New York.

The real estate portfolio may provide the company with some monetization options down the road. Or, if the company can get its operating performance on track, the real estate might make the company attractive to potential acquirers.

Pep Boys ended its latest quarter with $65 million in cash and $199 million in debt, and as of yesterday's closing price, trades at 1.22 times tangible book value per share. I'd be more interested in considering a new position -- I have owned shares previously -- if the company traded below tangible book. It may move closer to that level today.

Pep Boys isn't a slam dunk; it is a fairly well-known brand regionally, but hasn't been hitting on all cylinders for many years.

At the time of publication, the author held no positions in any of the stocks mentioned.

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

At the time of publication, Heller was long XXXX.

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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