U.S. retail sales have been clocking modest increases in recent months, but Best Buy
Best Buy's third-quarter net income fell 29%, to $154 million, or $0.42 per share. Revenue increased 1.7%, to $12.1 billion, and same-store sales inched up a mere 0.3%. Best Buy resorted to discounting to lure customers with sales in mobile computing, TVs, and movies, and unfortunately for Best Buy, many customers went for lower-margin promotional items.
The competitive landscape is brutal; Best Buy shares the electronics space with retailers like RadioShack
The elephant in the room continues to be Amazon.com
Best Buy's shares are getting slammed today, and, of course, there's a point when the pessimism surrounding a stock can be so overdone that it becomes a great bargain. However, that's not the case if the company in question is losing its competitive edge.
Best Buy is currently trading at just 6 times forward earnings and a PEG ratio of just 1.02. While these multiples sound cheap, make this a "bargain" you can resist. The continued sense that things just keep getting worse for Best Buy's growth and profitability give good reason to wait on the sidelines for signs of forward progress.
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