Book Retailers Cooking

• Email
• Share
• Print

Book purveyors Barnes & Noble (NYSE: BKS) and Borders Group (NYSE: BGP) have just reported their third-quarter earnings results, and they're not too shabby.

Borders experienced an 8% jump in sales, with revenues clocking in at $817 million. However, earnings were just $500,000, and if you back out insurance recoveries related to the company's store at the World Trade Center and losses related to closing some Waldenbooks locations, overall earnings were really just breakeven.

Still, the news is better than some expected. A year ago, the company reported a net loss. And sales at stores open a year or more rose 1.5%. CEO Greg Josefowicz noted that, "Throughout the third quarter, we saw comparable-store sales improve month by month. . "These trends support our projections that this holiday season will be an improvement over last year." Management expects the fourth quarter's earnings to top year-earlier levels by at least 10%. It also launched the firm's first dividend, something companies don't normally do unless they expect to be able to reliably keep paying it for years to come.

Meanwhile, results were arguably even stronger at Barnes & Noble, which operates Barnes & Noble and B. Dalton stores, Barnes & Noble.com and videogame retailer GameStop. Its third-quarter revenues advanced 12% to $1.27 billion, while earnings more than doubled over year-earlier levels, to $10 million. Sales at stores open at least a year grew a robust 4.5%.

Anyone interested in possibly investing in this industry should study these companies more closely, and should look at wily rival Amazon.com (Nasdaq: AMZN) as well. Amazon and Borders recently renewed a joint venture that profits both (read more).

Here are three good places to start your research: our discussion boards for Barnes & Noble , Borders and Amazon .

If you're looking for promising companies in which to possibly invest, check out our suite of stock-idea newsletters, one of which recommended Amazon.com 200% ago.