It was more of the same fromHome Retail(LSE: HOME) when the company reported itsfirst-quarternumbers this morning.
Like-for-like sales at the groups Argos unit fell 3.9% during the13 weeks from March 1 to May 30ascompetitionfrom online retailers continued to eat away at the units market share.
Things wereslightlybetter at Home Retails Homebase arm reported like-for-like sales growth of 5.4%. This performance was driven byinventory sales and store closures. Total sales declined 1.6%.
More of the same
Home Retails sales have beenunder pressurenow for more than five years as the companystrugglesto compete withspecialistretailers and online competitors likeDixons Carphone(LSE: DC) andAmazon.
Indeed,since 2011, Home Retails group sales have declined by 2.5%, pre-tax profit has slumped by more than 50% and basic earnings per share have fallen by 40%.
City analysts expect more of the same from the company over the next two years. Home Retails earnings per share expected to fall by 5%, to 12.4p during 2015, before rebounding by 9% during 2016 (fiscal 2017 for the group).
Lofty forecasts
At the other end of the spectrum, City analysts have penciled in earnings per share growth of 32% for Dixons this year. And the company is on target to meet this loftyforecast.
Group like-for-like sales expanded by 9% during the fourthquarter of last year, as benefits from the merger with Carphone Warehouse start to shine through. UK like-for-like sales jumped by 13%.
This growth is set tocontinueas Dixons is only really getting started on its expansion plans.
Growth plans
By the end of the year the Dixons Carphone group will have completed the merger of the old Dixons/Carphone head offices, started the process of mergingwarehouseoperations, builtintegratedmanagement teams andopened280 new mobile stores.
Onaverage, Dixons Carphone is opening fournew stores each week across its international footprint.
Based on these expansion plans, City analysts expect Dixons earnings per share to expand at acompoundannual rate of 19.1% through to 2017 thats a rate of growth youd be hard pressed to find elsewhere.
And even after rising around 43% since the merger, Dixons is still undervalued at present levels.
Undervalued
Dixons currently trades at a forward P/E of 19.4. Factor in the companys predicted growth rate for this year and you get a PEG ratio of 0.6. A PEG ratio below one implies that the companys shares offer growth at a reasonable price.
In comparison, Home Retail currently trades at a forward P/E ratio of 12.1, which looks cheap, but is an appropriate valuation considering the companys stagnating sales.
Still, Home Retails one advantage over Dixons is the companys dividend yield.
Home Retail currently supports a dividend yield of 2.6%, and the payout is covered three times byearningsper share. Dixons supports a dividend yield of 1.7%, and the payout is covered three times by earnings per share.
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Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.