No Holiday Bump for Best Buy (BBY) Stock
NEW YORK (TheStreet) -- Despite the approaching holiday shopping season, shares of Best Buy (BBY) - Get Report have rolled over and appear headed still lower.
BBY popped to the upside in August, but peaked in September and has been working lower. See chart above. Prices are now back below the 50-day simple moving average and the slope of the average is negative. Also note that the On-Balance-Volume (OBV) line peaked in March! The selling has been going on for a while. BBY could slip lower to retest the $30 area.
TheStreet Ratings team rates BEST BUY CO INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
We rate BEST BUY CO INC (BBY) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, reasonable valuation levels, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Specialty Retail industry average. The net income increased by 12.3% when compared to the same quarter one year prior, going from $146.00 million to $164.00 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 9.1%. Since the same quarter one year prior, revenues slightly increased by 0.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Net operating cash flow has significantly increased by 77.65% to $318.00 million when compared to the same quarter last year. In addition, BEST BUY CO INC has also vastly surpassed the industry average cash flow growth rate of -10.88%.
- After a year of stock price fluctuations, the net result is that BBY's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- You can view the full analysis from the report here: BBY
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.