Hhgregg Investing Report

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Daniel McClain
November 13, 2009
BADM 190W – Analysis of Business Issues

Hhgregg, Incorporated

EXECUTIVE SUMMARY

Hhgregg, Inc. is an electronics store company that is worthy of investing in for a multitude of reasons. The history of hhgregg indicates that they place a strong emphasis on customer service, which is why they are so successful. Hhgregg also has many important initiatives for the future, such as redesigning all of their stores, continuously retraining employees on customer responsiveness, and implementing a stringent corporate governance program. These valued-added initiatives will help hhgregg grow in the years to come. Their biggest competition is with Best Buy, who owns the biggest share of the electronic store market. To differentiate themselves, hhgregg offers a low price guarantee and enhanced customer responsiveness. The two main goals of hhgregg are to continue expanding the number of stores they operate, as well as increase their corporate social responsibility. These new goals and initiatives will help hhgregg become more profitable, which makes them a profitable company to invest capital in.

There has been a steady increase in net sales and net profit from hhgregg, as depicted on their income statement. By looking at their balance sheet, it is clear that hhgregg is expanding their company since their total assets have improved year after year. The comparative stock price of hhgregg has also increased dramatically since 2007 compared to the S&P 500 average even through the recession. After looking at two important financial ratios, the price-to-earnings and return on equity ratios, I determined that hhgregg is in a sound financial position because their ratios are above the industry average.

For those reasons among others, it would be a wise idea to invest in hhgregg. They are implementing many strong initiatives that will help the company succeed, and there are many financial factors that encourage investment as well. Based on projected future earnings, hhgregg is a company that will yield a sustainable return on investment for any shareholder.

TABLE OF CONTENTS

Executive Summary…………………………………………………………………Page 1

Introduction and Statement of Purpose……………………………………………...Page 3

Overview…………………………………………………………………………….Page 3

Financial Analysis…………………………………………………………………...Page 6

Figure 1, Stock Price………………………………………………………………...Page 7

Figure 2, Comparative Stock Price………………………………………………….Page 7

Recommendations…………………………………………………………………...Page 9

Appendix 1, Income Statement…………………………………………………….Page 11

Appendix 2, Balance Sheet………………………………………………………...Page 12

Works Cited………………………………………………………………………..Page 13

INTRODUCTION AND STATEMENT OF PURPOSE

Hhgregg, Inc., also known as Gregg Appliances (NYSE:HGG), is a service company that is in the electronic store industry. They offer a variety of appliance and electronic products to consumers. As an investor, it would be a wise idea to invest your capital in hhgregg, Inc. After carefully researching the company and looking at various financial ratios, I have determined that investing in hhgregg is a stable and profitable opportunity.

I have come to the conclusion that it would be wise to invest in hhgregg, Inc, due to many different reasons that will be outlined in this report. In the overview section of this report, I will examine the industry in which hhgregg operates and review their direct competitors. In addition, I will also review some important initiatives hhgregg is involved in, as well as provide a brief history of Gregg Appliances and their goals for the future. In the analysis section of this report, I will review both hhgregg’s income statement and balance sheet, as well as analyze their stock price. In addition, I will evaluate a couple of different key financial ratios for hhgregg, including Price-to-Earnings and Return on Equity. In the recommendations section of this report, I will evaluate why hhgregg...
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