Why Best Buy Stock Jumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Best Buy (NYSE: BBY  ) were soaring again today, climbing as much as 17% on a strong second-quarter earnings report.

So what: The big-box electronics retailer now seems to be in the full throes of a turnaround, its stock price having tripled in the past year. Earnings improved this time around due to cost-cutting and online sales initiatives, coming in after adjustments at $0.32 per share, well ahead of estimates at $0.12 and up from just $0.04 a year ago. Online sales jumped 10.5% in the period, but comparable in-store sales fell 0.6%, and revenue edged down 0.4% to $9.3 billion. That sum was still better than analyst expectations at $9.13 billion.

Now what: This was certainly a promising report for Best Buy, but with shares already having appreciated so much this year, the price may be reaching a ceiling. Best Buy is now valued at a P/E of 15 based on this year's earnings, less than Wal-Mart's at 14, which is generally considered a much stronger retailer. Best Buy appears to be on its way to full health, but I wouldn't expect serious growth until same-store sales are moving in the right direction.

Best Buy's resurgence may show that brick-and-mortar retailers are not done yet. Read about the 3 More Companies Ready to Rule Retail in The Motley Fool's special report. Uncovering these top picks is free today; just click here to read more.



Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2602819, ~/Articles/ArticleHandler.aspx, 9/1/2014 10:56:07 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement