They might sound funny when they talk, but those Minnesotans sure know how to run a retail electronics empire. Shares of Motley Fool Stock Advisor recommendation Best Buy (NYSE: BBY) jumped more than 6% in early trading following the firm's fourth-quarter and full-year earnings release.
Here's why: Revenues were up 21% for the fourth quarter and 17% for the year. Best Buy now sells $24.5 billion worth of goodies per year, double what it was peddling five years ago.
Earnings for the fourth quarter advanced 22% -- after backing out a one-time loss from the year-ago period -- to $1.42 per share. For the full-year's numbers, there were plenty of charges for discontinued enterprises, but comparing diluted earnings per share from continuing operations shows a 28% uptick, to $2.44 per share. (This year's generally accepted accounting principles (GAAP) number is $2.15.)
Wading through the numbers and flipping over rocks to look for scary surprises -- a common pastime in Minnesota, yah -- yields very little. Comps had a healthy rise, margins improved, and while SG&A ticked up slightly, it was nothing to scream about. Last quarter, the firm started paying dividends, it has been repurchasing stock, and despite those payouts, it now sits on $2.6 billion in cash.
Its static appliance sales notwithstanding, Best Buy is really starting to look like one of those boring super-success stories that constantly improve, like Starbucks (Nasdaq: SBUX) or would-be competitor Wal-Mart (NYSE: WMT). As Rick Aristotle Munarriz recently reminded us, Best Buy has flogged Circuit City (NYSE: CC) for so long now, you wonder if the chain can even be called a competitor.
Valuation is probably the only concern for investors. With the firm aiming for 15% to 20% earnings growth for the next year, at $51 per stub, the stock trades this morning at 17 times forward estimates of $2.87 per share. That may not scream bargain, but it looks like a reasonable price to pay for a slice of one of the world's premier retailers.
David Gardner recommended Best Buy for subscribers of
Motley Fool Stock Advisor
. To find out which other companies are in David's lineup, you can sign up for six months with a money-back guarantee.
Fool contributor Seth Jayson still enjoys flipping rocks in Minnesota lakes, because crayfish make great smallmouth bait. He owns no stake in any firm mentioned above. View his Fool profile here.
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