Apparently, a lot of investors decided there were better buys in the market than Best Buy
First-quarter earnings rose only 1.3%, to $155 million, or $0.36 per share. Revenue increased 7%, to $10.8 billion, and same-store sales increased 2.8%. Gross margin nudged up to 25.9%, from 25.3% in the year-ago period.
International revenue increased 11%, to $2.9 billion, although that's not as exciting as it sounds; without currency fluctuations, it was a mere 1.4% jump. However, international same-store sales did climb 6.3%, and China was a particular highlight, with comps surging approximately 30%.
Best Buy said it continues to gain domestic market share, up by an estimated 100 basis points. The company continues to develop new markets, and it's locking horns with GameStop
Despite investors' less-than-thrilled response, Best Buy's quarter wasn't all that bad. Compare it to small rival Conn's
Current weakness in Best Buy's share price might create a buying opportunity. The big-box retailer's trading at just 10 times forward earnings, cheaper even than stocks like Wal-Mart and Target, both of which fetch 12 times forward earnings. Best Buy's management seems to think its stock is a bargain, too, since the company bought back roughly 2.5 million shares in the quarter. In contrast, Conn's may trade at just eight times forward earnings, but given the major stumble in its business lately, buyer beware.
Best Buy remains a best-in-class retail stock and a leader in its particular retail niche. When it comes to better buys among retail stocks, Best Buy is one of the best picks.
Best Buy and Wal-Mart are Motley Fool Inside Value picks. Amazon.com and Best Buy are Stock Advisor recommendations. Motley Fool Options has recommended a bull call spread position on Best Buy. Motley Fool Options has recommended writing covered calls on GameStop. The Fool owns shares of Best Buy. Try any of our Foolish newsletters today, free for 30 days.