Thursday, October 16, 2008
Time to Buy?--the whole store
Being a former Richmonder, I've been keeping an eye on the shares of Circuit City (CC).
It closed today at 37 cents per share. That's down from the all time high of $30.39 on May 30, 2006. Now, I know CC has had it's problems. But 37 cents?
That means the market cap today is $65 million. Circuit City owns 682 superstores and 11 other stores in the U.S. according to Yahoo Finance and did business out of 779 Canadian stores. They also own a retail electronics website business.
Let's do the math. $65 mil. divided by 1472 stores comes to a market cap of $44,158 per store. We'll throw the website in for free. I know, I know, they're sitting on $288 million in debt. Divide that by 1472 stores and add the debt to the price and it comes to $239,810 per store.
Circuit City is valued by Wall Street at $240,000 per store?!?!? Yes they're bleeding cash, but golly jeeez, that's $140,000 less than the median price of a home in California this year!
Anyone out there who can explain that, I'd like to hear. Something can't be right.