If you look at PBY's historic P/E ratio as well as what it has been for the industry (I don't have the numbers, I'm working from generalized memory), 20-22 was on the high end and was only supported by presumed earnings growth. Maybe you can miss a quarter due to PBY's fill-in-the-blank excuse of bad weather (too hot/too cold); bad Mexican economy; bad whatever (check the quarterly reports for the past year), but when you badly miss two quarters in a row there's something wrong with your plan. In that case, the market does what it did to PBY: shoots you down to what, a P/E of 15?
PBY has acknowledged its plan isn't working, I think, with the most recent announcement that they are moving away from DIY to do-it-for-you. In order for DIFY to succeed, you have to have satisfied customers. In order for DIFY to succeed, you're going to have to please Wayne Huizenga/Republic/AutoNation. Given where PBY is in that plan, and given my own personal experiences at PBY stores, I think the jury will be out a long time on whether the company can execute what appears to be an intelligent plan. I am holding and, if the company executes the plan, we will be substantially higher 2-3 years from now. So yeah, at the current P/E, you're not going to get burned because either the company will execute and increase earnings or it won't and another company looking for instant growth in PBY's markets will buy out the company (the possibility of which will keep the price from going too much lower). Just don't look for quick $ here. |
