Pep Boys tops estimates by a penny in the second quarter, comps decline

Same-store sales, unfortunately, decreased 2.3%. While service is performing, the retail side of things is having some trouble. As the company mentioned, discretionary spending is tight.

According to The Wall Street Journal, Pep Boys is being assisted by the bad economy. Many consumers have decided against acquiring new cars, so they use a business like Pep Boys to keep their current cars running smoothly. Another element to keep in mind is that the company is diligently trying to fix its fundamentals so that it can improve its prospects for future growth. Many on Wall Street must believe in the turnaround scheme. The stock closed yesterday during the regular session at a little over $10 per share. The 52-week low is pegged at $2.62.

Shares of Pep Boys have done so well this year that, considering the drop in comps, I'm a little hesitant about buying right now. The market did take profits in Tuesday's after-hours session to the tune of over 5%. If we get a further pullback, then the stock might offer a trading opportunity. The way I see it, if the economy shows improvement, then the company should rise along with the rest of the market. If, on the other hand, the economy isn't improving like everyone believes it is, then consumers will still be using Pep Boys to service their rides. This is definitely a situation that demands proper due diligence; and again, be careful about buying too high.

Disclosure: I don't own any company mentioned; positions can change without notice.