1-Star Stocks Doomed to Drop: Blockbuster
By
Brian D. Pacampara
December 1, 2008
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Based on the aggregated intelligence of 120,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, video rental chain Blockbuster (NYSE: BBI) has received the dreaded one-star ranking. Our data has shown that one-star stocks woefully lag the market average; conversely, five-star stocks outperform the S&P by a significant margin.
With that in mind, let's take a closer look at Blockbuster's business and see what CAPS investors are saying about the stock right now.
Blockbuster facts
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Headquarters (Founded)
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Dallas (1982)
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Market Cap
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$229.4 Million
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Industry
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Specialty Stores
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Trailing-12-Month Revenue
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$5.48 Billion
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Management
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CEO James Keyes (since 2007)
CFO Thomas Casey (since 2007)
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Compound Annual Revenue Growth (Past Three Years and Year-Over-Year)
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(3.0%) and 0.2%
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Competitors
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Netflix (Nasdaq: NFLX)
Amazon.com (Nasdaq: AMZN)
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CAPS Members Bearish on BBI Also Bearish on:
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General Motors (NYSE: GM)
Ford Motor (NYSE: F)
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CAPS Members Bullish on BBI Also Bullish on:
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Apple (Nasdaq: AAPL)
Microsoft (Nasdaq: MSFT)
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Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
Over on CAPS, 752 of the 1,469 members who have rated Blockbuster -- some 51% -- believe the stock will underperform the S&P 500 going forward. These Fools include CAPS All-Star willmaster01 and stan8331.
Just last week, willmaster01 made a Web-based bear argument: "Who doesn't download free movies online. Until they get net neutrality sorted out or some other means of enforcing non piracy, this company is down and out [for the] same reason record companies are feeling the pinch."
In a pitch two weeks earlier, stan8331 tapped Blockbuster as a scary story in the making:
If they're incapable of competing with Netflix, I see no future for Blockbuster. Their brick and mortar dvd rental business was profitable when there weren't cheap, easy alternatives. Online streaming is the wave of the future for instant access, otherwise Netflix gets dvd's to you at a very fast rate via U.S. mail. Basing your whole business model on convincing people to spend gas driving to your store in order to pay $4 tax to rent a single DVD (and then spend more gas to drop it off) is a recipe for bankruptcy.
What do you think about Blockbuster, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 120,000 investors are waiting to hear what you have to say. CAPS is 100% free, so get started!
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