Today, GAMCO's
Mario Gabelli
has reported increasing his stake in auto service company, Pep
Boys - Manny, Moe & Jack (
PBY
) by 14.02 percent, according to
GuruFocus Real Time Picks
.
The transaction places him at 8.65 percent ownership of the
company's outstanding shares.
The value investing Guru first acquired Pep Boys in the fourth
quarter of 2008, starting off with 1.4 million shares, purchased
at an average price of $4.11. The stock has surged significantly
since then. Trading at $9.85 today, the stock is up 0.41 percent
about half an hour before market close.
Gabelli currently owns 4,590,887 shares of Pep Boys, after his
latest purchase, compared to his 3.4 million shares in the third
quarter of 2012.
Based in Philadelphia, Pep Boys is an auto retail chain known for
its automotive maintenance and repair services, name-brand tires
and expert auto advice. In 2012, it reached its peak price in
February and its lowest in May. For the year, it declined 10.45
percent in value.
In its latest earnings filing, it reported a decrease in sales by
2.4 percent but a gain in customer transactions and recovering
tire margins by 3.4 percent. Recently, the company expanded its
ecommerce segment, making available online service appointment
scheduling, which is just the beginning of its efforts to
integrate its entire list of service offerings and store
merchandise to the company's "emerging digital capabilities." (
View its latest Investor Presentation here
).
Last November, Gabelli appeared on Bloomberg radio segment,
Bloomberg Surveillance, and discussed his confidence in Pep Boys.
"How do I make 50 percent back for my clients in the next 12
months? The answer is, you take a company like Pep Boys...
they're going to have some short-term negatives but they have a
good balance sheet [and] good business model in the sense of
selling tires... Pep Boys, I think, will be sold within 12
months," he said.
About a month after the interview, Gabelli reported increasing
his Pep Boys stake by 18.89 percent.
In December, Pep Boys announced a $50 million stock repurchase
program, which includes the SEC's Rule10b5-1 trading plan, which
would enable the company to repurchase its shares during periods
outside of its normal trading windows.
"Based on current market prices, we believe that our stock is
undervalued and that the repurchase program is a good investment
of available cash on hand and future cash flows," Pep Boys
president and CEO, Mike Odell, said in a Dec. 12 news release.
In its
10-Year financials
, Pep Boys has maintained a 62.6 percent free cash flow growth
rate in the past 12 months. Its book value has grown 6 percent in
the same time frame, as well as 2.9 percent in revenue.
Ranked 1 star in
Business Predictability
, GuruFocus rates Pep Boys 6 in Financial Strength and 7 in
Profitability and Growth. It has a P/E (ttm) ratio of 22.3, a P/B
ratio of 0.9 and a P/S ratio of 0.3.
Besides Gabelli, other Gurus who have stake in Pep Boys include
Donald Smith, Jim Simons, Jeremy Grantham and Jean-Marie
Eveillard.
To view the rest of Gabelli's latest trades, go to Mario
Gabelli's Stock Picks. Also view his undervalued stocks, his high
yield companies and his top growth stocks.
To read more on relevant topics, visit the following GuruFocus
articles and submissions:
Pep Boys: "Everything for Less," Even Its Stock
Price
A Buyout Offer! Now What?
Mario Gabelli Discusses Small Caps and Fiscal
Cliff
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