Rating Change #8
Best Buy (BBY) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, poor profit margins and a generally disappointing performance in the stock itself.
Highlights from the ratings report include:
- BBY's revenue growth has slightly outpaced the industry average of 3.9%. Since the same quarter one year prior, revenues slightly increased by 1.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- BEST BUY CO INC's earnings per share declined by 22.2% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, BEST BUY CO INC increased its bottom line by earning $3.12 versus $3.08 in the prior year. This year, the market expects an improvement in earnings ($3.40 versus $3.12).
- The gross profit margin for BEST BUY CO INC is currently lower than what is desirable, coming in at 26.20%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.30% trails that of the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Specialty Retail industry. The net income has significantly decreased by 29.0% when compared to the same quarter one year ago, falling from $217.00 million to $154.00 million.
Best Buy Co., Inc. operates as a retailer of consumer electronics, home office products, entertainment products, appliances, and related services primarily in the United States, Europe, Canada, and China. The company has a P/E ratio of 8.1, below the average retail industry P/E ratio of 8.3 and below the S&P 500 P/E ratio of 17.7. Best Buy has a market cap of $8.47 billion and is part of the services sector and retail industry. Shares are up 1.3% year to date as of the close of trading on Wednesday.You can view the full Best Buy Ratings Report or get investment ideas from our investment research center.