Best Buy Goes Eponymous: Fool by Numbers

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On Tuesday, Sept. 12, electronics retailer Best Buy (NYSE: BBY) released Q2 2006 earnings for the period ended Aug. 26, 2006.

• Respectable sales growth plus expanding net margin plus significant share buybacks equals a happy EPS figure, and Best Buy delivered on all of these fronts.
• The company is changing its product mix to focus more on home theater systems. Stocking up on big-ticket items like plasma TVs and surround-sound systems explains some of the disproportionate rise in inventories.
• For the second quarter in a row, the analyst community was caught flat-footed by Best Buy's excellent performance. If the company can keep this up through the crucial holiday season, investors will have plenty to celebrate come next February.

(Figures in millions, except per-share data)

Income Statement Highlights

	Avg. Est.	Q2 2006	Q2 2005	Change
Sales	$7,550	$7,603	$6,702	13.4%
Net Profit	--	$230	$188	22.3%
EPS	$0.44	$0.47	$0.37	27%
Diluted Shares		497	509	(2.5%)

Get back to basics with a look at the income statement.

Margin Checkup

	Q2 2006	Q2 2005	Change*
Gross Margin	25.02%	25.53%	(0.51)
Operating Margin	4.34%	3.89%	0.45
Net Margin	3.03%	2.81%	0.22

*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets	Q2 2006	Q2 2005	Change
Cash + ST Invest.	$2,687	$2,825	(4.9%)
Accounts Rec.	$483	$389	24.2%
Inventory	$4,049	$3,250	24.6%

Liabilities	Q2 2006	Q2 2005	Change
Accounts Payable	$3,877	$2,760	40.5%
Long-Term Debt*	$527	$552	(4.5%)

*Including $497 million of long-term debt moved into the current category this year, and $12 million in the year-ago period.

Learn the ways of the balance sheet.

Cash Flow Highlights
The company declined to provide this essential piece of the puzzle.

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Related Companies:

• Circuit City Stores (NYSE: CC)
• RadioShack (NYSE: RSH)
• Staples (Nasdaq: SPLS)
• Sears (Nasdaq: SHLD)
• Amazon.com (Nasdaq: AMZN)
• Apple Computer (Nasdaq: AAPL)

For related Foolishness:

• 5 Ways to Earn Better Returns
• Great Companies, Great Returns
• Seriously, Now Is the Time for New Money

Best Buy and Amazon are both Motley Fool Stock Advisor selections. Take the service for a free 30-day spin to find out what Tom and David Gardner like about these companies -- and many others.

Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean.

At the time of publication, Anders Bylund held no position in any company mentioned. Fool rules are here.