TVs Big for Best Buy

Updated from 8:25 a.m. EDT

Strong demand for big, flat-screen televisions helped Best Buy (BBY Quote - Cramer on BBY - Stock Picks) post a 22% increase in second-quarter earnings, topping Wall Street's estimates.

The profit report sent shares of the consumer electronics chain climbing Tuesday, while rival Circuit City (CC Quote - Cramer on CC - Stock Picks) also caught a bid.

With prices for new-age, digital, high-definition and plasma televisions falling, many consumers are opting for an upgrade for their home theater despite a softening housing market and other headwinds for consumer spending.

"It's a really exciting and dynamic time," said Best Buy CEO Brad Anderson on a conference call with analysts. "The growth in television is really just beginning."

Best Buy earned $230 million, or 47 cents a share, for the quarter ended Aug. 26, up from $188 million, or 37 cents a share, last year. Analysts, on average, expected earnings of 44 cents a share, based on estimates compiled by Thomson First Call.

Shares of Best Buy recently were up $2.03, or 4.3%, to $49.80. Circuit City saw its shares jump $1.27, or 5.4%, to $24.85 in concert, as investors predicted strong TV sales for the No. 2 consumer electronics chain as well.

Circuit City, which will report its earnings next week, is expected to post a second-quarter profit of 5 cents a share, up from the penny a share it logged for the same quarter last year. The company recently has begun to shore up its market share against Best Buy, having restructured its store base to better compete with its larger rival.

(To read what TheStreet.com Ratings has to say about Best Buy and the rest of the consumer-electronics sector, click here.)

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