Why Best Buy Is Poised to Pull Back

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, electronics retailer Best Buy (NYSE: BBY  ) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at Best Buy and see what CAPS investors are saying about the stock right now.

Best Buy facts

   

Headquarters (founded)

Richfield, Minn. (1966)

Market Cap

$6.5 billion

Industry

Computer and electronics retail

Trailing-12-Month Revenue

$49.6 billion

Management

CEO Hubert Joly (since 2012)

CFO Sharon McCollam (since 2012)

Trailing-12-Month Return on Equity

(5.7%)

Cash/Debt

$1.8 billion / $2.3 billion

Dividend Yield

3.7%

Competitors

Amazon.com (NASDAQ: AMZN  )

Apple (NASDAQ: AAPL  )

Wal-Mart (NYSE: WMT  )

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 23% of the 3,461 members who have rated Best Buy believe the stock will underperform the S&P 500 going forward.

Just last week, one of those Fools, MrOneHundred, succinctly summed up the Best Buy bear case for our community:

There are simply way too many products offered by the business to attract any one group of customers looking for specialization in a certain product. Not to mention the amount of market share being stolen by competitors (most notably Amazon) which I think are executing sales in a successful manner. ...

According to the WSJ, "sales of smartphones have been unable to offset the revenue the company formerly reaped from sales of flat-screen TVs, whose prices and margins have eroded." Hear that? Best Buy is having a hard time selling smart phones even!

Fundamentals also aren't very bright here. Factor in unfavorable market conditions, and there you have it!

Of course, there are far more unanswered questions about the future for the big-box electronics retailer. How will new leadership perform? Will old leadership take the company private? Will a smaller store format work out for both the company and its brave investors? Should you be one such brave investor? To help answer all these questions, The Motley Fool has released a new premium research report detailing the opportunities -- and the risks -- in store for Best Buy. Simply click here now to claim your comprehensive report today.

Want to see how well (or not so well) the stocks in this series are performing? Follow the TrackPoisedTo CAPS account.


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