Best Buy (BBY) Stock Up Today, Earnings Helped by Sale of High Margin Products

Best Buy (BBY) stock is trading higher this morning after the company posted better than expected fourth quarter profit and announced a share buyback plan.

By Kurumi Fukushima , Mar 3, 2015 9:04 AM EST

NEW YORK (TheStreet) -- Shares of Best Buy (BBY) - Get Report are up 2.25% to $39.50 in pre-market trading Tuesday, after the consumer electronics retailer posted better than expected profits for the fourth quarter.

Best Buy posted earnings of $1.48 per share, better than the $1.24 per share it reported a year ago, and higher compared to the consensus earnings estimate of $1.35 per share. The company said the rise in profit was helped by strong holiday sales of higher-margin products, including large-screen TVs and smartphones.

Revenue of $14.21 billion for the quarter was lower compared to the $14.47 billion Best Buy posted a year ago. The quarterly figure also fell short of the $14.35 billion analysts had estimated, but Best Buy notes that several analysts did not update their revenue estimates after announcing the sale of its Five Star business.

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Total same-store sales increased 2% during the fourth quarter, better than the 1.9% rise estimated by analysts. U.S. same-store sales rose 2.8%, marking its second straight quarter of growth following three quarters of decline.

Best Buy said it would buy back $1 billion of shares over the next three years.

Additionally, Best Buy announced a special dividend of 51 cents per share, related settlements of a lawsuit on price fixing of TFT-LCD panels.

Richfield, MN-based Best Buy is a multinational, multichannel retailer of technology products, including tablets and computers, televisions, mobile phones, large and small appliances, entertainment products, digital imaging and related accessories.

The company also offers technology services including technical support, repair and installation under the Geek Squad brand.

Separately, TheStreet Ratings team rates BEST BUY CO INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate BEST BUY CO INC (BBY) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including poor profit margins and weak operating cash flow."