Best Buy Co Inc Stock Hold Recommendation Reiterated (BBY)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- Best Buy (NYSE: BBY) has been reiterated by TheStreet Ratings as a hold with a ratings score of C- . The company's strongest point has been its a solid financial position based on a variety of debt and liquidity measures that we have looked at. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • BBY, with its decline in revenue, underperformed when compared the industry average of 11.6%. Since the same quarter one year prior, revenues slightly dropped by 7.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • BEST BUY CO INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, BEST BUY CO INC swung to a loss, reporting -$3.17 versus $3.12 in the prior year. This year, the market expects an improvement in earnings ($3.15 versus -$3.17).
  • The share price of BEST BUY CO INC has not done very well: it is down 21.72% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • Net operating cash flow has significantly decreased to -$601.00 million or 382.15% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • 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 93.2% when compared to the same quarter one year ago, falling from $177.00 million to $12.00 million.

Best Buy Co., Inc. operates as a retailer of consumer electronics, computing and mobile phone products, entertainment products, appliances, and related services primarily in the United States, Europe, Canada, and China. The company has a P/E ratio of -6.4291, and below the S&P 500 P/E ratio of 17.7. Best Buy has a market cap of $6.26 billion and is part of the services sector and retail industry. Shares are down 20.5% 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.

--Written by a member of TheStreet Ratings Staff.

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