With black Friday right around the corner, many bargain hunters will be lining up at Best Buy Co Inc (BBY) to score the best electronic gadget deals. Does Best Buy have strong momentum going into holiday season? Is now a good time buy BBY stock? Let’s take a look at Best Buy’s recent earnings report to find out.
Best Buy – Company Overview
Spanning several continents, the Best Buy family of brands generates over $42 billion in sales per year. This is because in addition to its namesake stores, Best Buy also covers Geek Squad, Napster, The Phone House, Future Shop and several other major electronics retailer brands.
Best Buy is in the middle of shifting from a product-centric business model to a customer-centric model. So, the Best Buy of today will likely be vastly different from what we see five or ten years from now.
Yield-seekers may like to know that on Friday, Best Buy declared a cash dividend of 19 cents per share. BBY pays a solid 2% dividend yield.
Best Buy – Earnings Rundown
For the third quarter Best Buy’s net income nearly doubled to $107 million, compared with $54 million last year. Adjusted earnings for Best Buy were 32 cents per share, beating analysts’ estimates of 25 cents per share.
Total revenue rose to $9.4 billion, up 0.5% from last year. Comparable store sales in the U.S. were up by 3.2%, while comparable online sales were up 21.6%. Best Buy is in its second year of its Renew Cost Reduction Initiative, which yielded $65 million for the quarter.
Best Buy – Current Ratings
BBY currently earns “Cs” for both its Quantitative Grade (a measure of the stock’s risk-to-return ratio) and its Fundamental Grade.
The fact is that Best Buy still needs a lot of help in improving sales growth (F), earnings momentum (F), earnings growth (D) and operating margin growth (C). Meanwhile, Best Buy is doing well in terms of earnings surprises (A), analyst earnings revisions (B), cash flow (A) and return on equity (B).
As of this posting, Nov. 24, I consider BBY a “C-rated hold.”
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
