On Sept. 18, Best Buy (NYSE:BBY) released second-quarter earnings for the period ended Sept. 1.

  • Back-to-school shoppers picked up big-ticket items -- notebook computers, televisions, and video games -- and helped drive sales up 15.1% and comps up 3.6%.
  • The gross margin dropped mainly from the addition of the China business that carries low gross-profit rates.
  • The company reduced its outstanding shares by 8%, which boosted earnings per share 17%.
  • Best Buy is a three- out of five-star stock in The Motley Fool's CAPS community. It's struggling rival, Circuit City (NYSE:CC), is seeking charm tomorrow when it releases quarterly results, but CAPS investors aren't too bullish; that stock earns only one star.

 (Figures are in millions, except per-share data.)

Income Statement Highlights

Q2 08

Q2 07

Change

Sales

$8,750.0

$7,603.0

15.1%

Net Profit

$250.0

$230.0

8.7%

EPS

$0.55

$0.47

17.0%

Diluted Shares

456.2

496.5

(8.1%)

Get back to basics with the income statement.

Margin Checkup

Margin

Q2 08

Q2 07

Change*

Gross

24.5%

25.0%

(0.6)

Operating

4.6%

4.3%

0.2

Net

2.9%

3.0%

(0.2)

*Expressed in percentage points.

Margins are the earnings engine.

Balance Sheet Highlights

Assets

Q2 08

Q2 07

Change

Cash + ST Invest.

$1,511.0

$2,668.0

(43.4%)

Accounts Rec.

$554.0

$483.0

14.7%

Inventory

$4,650.0

$4,049.0

14.8%

Liabilities

Q2 08

Q2 07

Change

Accounts Payable

$4,312.0

$3,858.0

11.8%

Long-Term Debt

$600.0

$184.0

226.1%

The balance sheet reflects the company's health.

Cash Flow Highlights
Electronics don't work without power in, and due diligence doesn't work without a cash flow statement.

Related Foolishness:

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