Smallcaps To Observe: Hhgregg, Inc. (NYSE:HGG), Marten Transport, Ltd (NASDAQ:MRTN)


Doubts over Marten Transport, Ltd (NASDAQ:MRTN)’s growth prospects hurting shares

Marten Transport, Ltd (NASDAQ:MRTN) is still struggling to shake off the aftermath of its disappointing 1Q2016 revenue. Shares shed more than 3.4% in the last session, a sign that investors are still questioning where the protective transporter’s growth will come from in the future.

Marten Transport, Ltd (NASDAQ:MRTN)’s revenue in 1Q grew slower than Wall Street expected. Revenue of $161.9 million missed the consensus estimate of $170.1 million. CEO, Randolph Marten, admitted the quarter was tough because of pricing pressures and soft demand. But he added that Marten Transport still managed to post a growth, except that the growth was too small to impress investors.

Marten Transport’s 1Q revenue edged up by $642,000 or 0.3% over the same quarter a year ago. Coming to the bottom-line, the company earned a profit of $8.2 million, equivalent to EPS of $0.25, up 2.4% from a year ago quarter.

Marten Transport, Ltd (NASDAQ:MRTN) is hoping for stronger growth at both the top and bottom line in the balance of 2016 after it boosted it recently increased its fleet. The company added 384 tractors to its fleet, thus increasing the number of its tractors in its portfolio by 16.5%.

Marten Transport’s bottom-line is also set to improve given that the company has paid off all its debt that it no longer have an outstanding debt that could way down its earnings through interest expense.

Why focus is on Hhgregg, Inc. (NYSE:HGG)’s largest shareholder

Hhgregg, Inc. (NYSE:HGG) is struggling to regain its footing after a string of misfortunes that have led to the exit of some of its top executives. The company’s CEO. Dennis May, resigned early this year and Robert Riesbeck, the CFO, was picked as the caretaker CEO. Although some investors are closely watching to see what comes out of the efforts by Riesbeck to bring Hhgregg back to its feet, others are looking at the top investor.

Freeman Spogli & Co. has been an investor in Hhgregg, Inc. (NYSE:HGG) since at least 2005 and now owns nearly 50% of the company. Questions are asked about whether the hedge fund will stay in to see the results of another turnaround attempt or bail out. Speculation over Freeman’s possible move could help explain the recent volatility in the stock. Confirmation on whether or not Riesbeck is taking the company somewhere will come next month when the company reports its F4Q2016 earnings.

Despite its troubles, which are partly described by shrinking sales, Hhgregg, Inc. (NYSE:HGG) doesn’t have a debt and it has access to nearly $200 million in credit facility.

Overall, investors will be looking to see if Hhgregg, Inc. (NYSE:HGG) rekindle its fading sales. To try and off pressure from its weak consumer electronics arm, the company has ventured into furniture and mattresses. Although there is hope that furniture business could help boost sales, the segment is still only a tiny fraction of the business contributing just 5% of sales in the last quarter. But during the quarter core appliances business saw same-store sales contract 10.4%.

It remains to be seen if services such as free delivery will help Hhgregg, Inc. (NYSE:HGG) stem competitive and revive sales growth.


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