Sorry for not responding before now to your post. Frankly, I haven't been following the company since I sold.
Your analysis as to the historic p/e is useful; what were the high/low p/e for each year? (I believe you posted the end of year p/e.)
My opinion: the change in strategy to become a nationwide auto service center is a different business than selling parts, either over the counter or to repair shops. Two questions arise: will the transition work and, even if it does, is it worth sticking around as a shareholder?
As for whether the transition will be accomplished, all I can tell you is that my wife and I have had terrible service experience on multiple occasions at PBY stores that are about 75 miles apart. For something that is supposed to become PBY's flagship profit driver, this doesn't bode well it seems to me. Others have reported on lousy service. Go in and get your car serviced there and see what your experience is.
As for the second question, is it worth it, well, there are Sears Auto Service Centers, there is K-Mart/Penske, Midas, Goodyear, etc. Is this really an area that offers solid growth? As for the alliance with Auto Nation, the arrangement makes sense for AN because it doesn't have to establish a network of service bays the way traditional dealers have (a side note: interestingly, some traditional dealers don't do auto body repairs, instead referring you to the best body shop in town). But I'm not convinced PBY will provide the level of customer satisfaction that you receive from the local Honda dealership. Therefore, AN will have two options: buy out PBY for the service locations or enter into an agreement with someone else (Sears co-branding would give AN the credibility of a tie-in with one of America's oldest brands, although it's had its share of auto repair problems over the past several years.)
The point is that someone will fix cars; the question is whether PBY will become a nationwide leader in the field and whether, at the end, it's worth it. For me, I don't think they will and that even if they accomplish that goal, it won't be worth it.
Again, I'd want to see at least two consecutive quarters of earnings growth from the service component before I'd recommend going back in.
JMO. |
