Best Time for Best Buy?

Best Buy (NYSE: BBY  ) is doing about as well as can be expected in these difficult times, judging by the company's fourth-quarter tidings. However, it did beat analysts' expectations, which gave investors something to hinge some optimism on.

The electronics retailer's fourth-quarter net income dipped 3.4% to $737 million. If you're wondering why its earnings per share actually increased 10% to $1.71 per share, bear in mind the company has been buying back shares. Also note the fourth quarter last year included an extra week.

Best Buy's total sales increased 4% to $13.4 million, while its same-store sales dipped 0.2%, up against a strong 5.9% jump this time last year.

The retailer's quarterly earnings beat analysts' expectations for earnings of $1.65 per share. Also, Best Buy gave guidance for earnings of $3.25 per share to $3.40 per share for fiscal 2009, since it expects the second half of this year to pick up some steam despite near-term consumer weakness. Analysts had expected earnings of $3.33 per share for fiscal 2009.

Best Buy's fourth quarter wasn't really all that thrilling, especially since its EPS number was helped along by the reduced share count and its gross and operating profit margins dipped (plus, Best Buy said gross profit will be unchanged this coming year). However, despite near-term challenges in a difficult macroeconomic environment, I far prefer Best Buy to several of its electronics rivals that are in turnaround mode, such as Circuit City (NYSE: CC  ) and RadioShack (NYSE: RSH  ) .

I think long-term investors have little to fear with Best Buy, given its customer-centric approach to electronics retail (which is often so glaringly lacking in its rivals). It's also recently loaded up on some initiatives that should help still more, like offering both Apple (Nasdaq: AAPL  ) and Dell (Nasdaq: DELL  ) computers in its stores.

I can see why some cautious investors might prefer to see whether the near-term macroeconomic challenges might present a better price on Best Buy, and that may be a thought, but I think this is a quality company for the long term, looking pretty reasonable trading at 14 times earnings.

Shop for some related Foolishness:


Read/Post Comments (0) | Recommend This Article (7)

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.

DocumentId: 612558, ~/Articles/ArticleHandler.aspx, 7/24/2014 2:05:39 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