Best Buy, J.C. Penney, and GameStop Deliver Volatility

It's never too late to start holiday shopping -- at least when it comes to investors eyeing opportunities in volatile retailers. I kicked off this week by taking a look at three chains that had plenty to prove with their fresh financials this week, and now that all three have stepped up, it's a good time to take a look back at how they fared.

Best Buy  (NYSE: BBY  )
The leading consumer-electronics retailer saw its stock plunge 11% -- on its highest trading volume since April -- on Tuesday after posting uninspiring quarterly results.

It wasn't a bad report. Revenue clocked in flat at $9.36 billion as international weakness offset slight improvement at its domestic stores, but adjusted earnings more than quadrupled to $0.18 a share. We're still a far cry away from the $0.47 a share it earned a year ago, but at least Best Buy is moving in the right direction and comps are starting to turn positive. 

Best Buy still hasn't conquered the showrooming threat, and we'll get a clearer picture there over the holidays if margins don't hold up as Best Buy matches lower prices offered elsewhere. The stock has simply more than tripled this year, so naturally investors were hoping that Best Buy wouldn't still be lagging the ghost of what it was two years ago when the stock was much lower.

J.C. Penney  (NYSE: JCP  )
The struggling department store operator was the only one of the three to move higher on its quarterly results, and that may seem surprising since it's the only one that failed to exceed Wall Street's bottom-line expectations. The stock moved 8% higher on Wednesday, encouraged by the retailer's outlook for positive comps during the holiday quarter that proved to be so challenging for the chain a year earlier.

Despite sales being lifted by a boost in e-commerce and selling old inventory below cost -- something that forced gross margins into its fourth year of declines -- investors feel that the J.C. Penney stock that bottomed out at $6.24 less than a month ago has a shot at bouncing back. Inventory levels remain stubbornly high, but creditors are going to cut the chain some slack if it is able to bounce back over the holidays with improving margins. 

GameStop  (NYSE: GME  )
GameStop shares opened 4% lower today and were trading as much as 11% off later in the day after issuing disappointing guidance for the holiday quarter. There was nothing wrong with the video game retailer's fiscal third quarter. It was a blowout period, highlighted by a huge 20.5% surge in comps that lead to healthier than expected sales growth.  

However, die-hard gamers weren't so keen on clicking the "continue?" option after it offered up its outlook for the current quarter. Eyeing a profit of $1.97 to $2.14 a share isn't going to cut it when it earned $2.16 a share last year. Analysts were holding out for $2.15 a share. This looks even worse when you consider that it's been buying back a lot of stock over the past year, ideally pushing per-share profitability higher. 

You can't please everybody, but it seems as if the bar gets set even higher when you've seen your stock double in 2013 the way that GameStop has -- or nearly quadruple as was the case at Best Buy before its Tuesday slide.

Welcome to the volatility of fast-moving retailer stocks, where every day is Black Friday for investors.

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Related Tickers

9/28/2016 2:32 PM
BBY $37.71 Down -0.55 -1.42%
Best Buy CAPS Rating: *
GME $27.52 Up +0.09 +0.33%
GameStop CAPS Rating: **
JCP $9.47 Down -0.08 -0.84%
J.C. Penney CAPS Rating: *