Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of electronics retailer Best Buy
So what: Best Buy sales have been helped recently by bargain-hungry shoppers, but today's results -- third-quarter earnings fell 29% -- show just how badly those discounts are eating into profits. Management is naturally doing its best to compete against fierce online foe Amazon
Now what: I wouldn't be so quick to pounce on today's plunge. Management did reiterate its full-year EPS guidance of $3.35-$3.65 on revenue of $51 billion to $52.5 billion, but it's obvious that the major competitive challenges facing Best Buy aren't going away anytime soon. With the sluggish economy likely to continue pushing customers toward lower-cost rivals, the shares seem like an easy pass.
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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Fool owns shares of Best Buy, Amazon, and Wal-Mart. Motley Fool newsletter services have recommended writing covered calls in Best Buy. Motley Fool newsletter services have recommended buying shares of Amazon and Wal-Mart, as well as creating a diagonal call position in Wal-Mart. Try any of our Foolish newsletter services free for 30 days.