Beat it, missed it, beat it, missed it -- for four quarters in a row now, electronics retailer Best Buy (NYSE:BBY) has alternately trounced and tumbled over the hurdles Wall Street set for it. If the pattern holds, then Tuesday's news should be good, right? Right?

What analysts say:

  • Buy, sell, or waffle? Twenty-six analysts follow Best Buy, and 15 of them think it really is. Ten more say to hold the stock, and only one counsels selling.
  • Revenue. On average, they expect to see 12% sales growth to $8.49 billion.
  • Earnings. Profits are predicted to slide 6.8% to $0.44 per share.

What management says:
The big news out of Best Buy this quarter was doubtless its decision to follow in the footsteps of fellow retailers Staples (NASDAQ:SPLS) and Target (NYSE:TGT) and initiate a major buyback. At $5.5 billion, Best Buy's announcement was the biggest of the three by a large measure. At the time, I compared Best Buy with rivals Circuit City (NYSE:CC) and Wal-Mart (NYSE:WMT) and concluded that while the absolute "best-ness" of the plan was debatable, Best Buy did at least offer one of the best relative valuations in the sector.

Fast-forward a few weeks to Best Buy's earnings guidance update in August, and the numbers didn't really change my opinion. Management reaffirmed its guidance for this fiscal year: $39 billion in revenue, about 4% same-store sales growth, and earnings per share of $2.95 to $3.15 per share -- a target range that will be easier to meet as the firm reduces the amount of stock among which its earnings get "per-shared."

What management does:
Best Buy has had some rough goings in the gross margin department this past year. In fact, the rolling numbers slid in all but one quarter. In contrast, operating and net margins have tracked the earnings pattern I noted above (and at this point, the old advice about correlations and causations comes to mind) -- continuously jumping around.

Margins

2/06

5/06

8/06

11/06

3/07

6/07

Gross

25.0%

25.0%

24.9%

24.7%

24.4%

24.1%

Operating

5.3%

5.5%

5.6%

5.4%

5.7%

5.3%

Net

3.7%

3.8%

3.8%

3.7%

3.8%

3.6%

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
From an objective standpoint, investors can't be anything other than disappointed with Best Buy's stock performance since we recommended the shares in the December 2003 issue of Motley Fool Stock Advisor. Up just 15% over the period, they've lagged the S&P 500 by a good 25 points. But does that mean Foolish investors should give the stock up for dead?

Fool co-founder David Gardner, who recommended Best Buy, thinks not. In his most recent semiannual update on Best Buy, he said he thinks the company can remain a top place for consumers to find their gadgets, especially with its recent partnership with Apple (NASDAQ:AAPL). Want to hear more about why David still thinks Best Buy has potential to remain a winner? Sign up for a test run of Stock Advisor -- no charge, and no strings attached -- and find out.

Fool contributor Rich Smith does not own shares of any company named above. Wal-Mart is an Inside Value recommendation. The Motley Fool has a disclosure policy.