Where do you go to make electronics purchases? Fifteen years ago, that question would have been easy for me to answer. I make a trip to my local Best Buy (NYSE: BBY), browse the aisles for a while adding way more than I ever intended to purchase before picking up my targeted item and heading home.

But today the answer is much more complicated than that. Best Buy’s bread and butter electronics are everywhere. Target (NYSE: TGT) and Wal-Mart (NYSE: WMT) provide electronics along with milk and eggs while online retailers like Amazon.com (Nasdaq: AMZN) and eBay (Nasdaq: EBAY) provide selection, great prices, and home delivery.

During a recent rare trip to Best Buy I found myself wondering if it offered anything I couldn’t pick up on my regular Target trips. Outside of a camcorder or a random audio cable there wasn’t much I could think of that I would rather buy at Best Buy. DVDs, computers, TVs, cell phones, and audio equipment can be found almost anywhere and often at better prices.

So if Best Buy doesn’t have a solid competitive advantage, the question becomes whether the stock provides enough value versus the risk the company can’t survive. After all, its biggest competitor, Circuit City, has already bit the dust.

You could look at its trailing P/E ratio of 9.9 or a forward P/E ratio of 8.3 as reasonable values. For the last 10 years revenue has increased and the company has been profitable. And management continues to buy back shares and pay a nice 2.1% dividend. If you didn’t know Best Buy’s competitive position was deteriorating, these numbers might scream, "BUY BUY BUY!"

But I am more concerned about a falling return on assets for the company. Best Buy puts a lot of money into building stores and if the return on those stores is falling while store count is growing the company is throwing good money after bad.






Return on Assets





As you can see above, the trend isn’t headed in the right direction and the trailing return on assets of 8.1% is well below the five-year average of 9.1%.

Despite seemingly attractive earnings multiples and management returning cash to shareholders, I don’t see Best Buy’s stock as a buy right now. With Amazon, Target, Wal-Mart, and others providing more competition than Circuit City ever did, Best Buy may just wander forward as another ho-hum electronics retailer. And I’ll reminisce about how excited I used to be to go to Best Buy back in the good old days.

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Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

Best Buy and Wal-Mart are Motley Fool Inside Value choices. Amazon, Best Buy, and eBay are Stock Advisor recommendations. Wal-Mart is a Global Gains pick. Wal-Mart is an Income Investor pick. Motley Fool Options has recommended a diagonal call position on Wal-Mart. The Fool owns shares of Best Buy and Wal-Mart. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.