Best Buy Co., Inc
) surged to attain a new 52-week high of $29.91 on Jul 1, 2013,
before closing at $29.74. Shares of this Zacks Rank #3 (Hold)
stock have amassed a year-to-date return of roughly 155.3%.
Based on the current price, this consumer electronic retailer
is 12.9% above the Zacks Consensus average analyst price target
of $26.34. The company currently trades at a forward P/E of
13.07x, a discount of 3.6% to the peer group average of
Best Buy is undergoing a turnaround program including a price
match policy, multi-channel strategy, multi-year cost reduction
program and closure of some big box stores. In the first quarter
of fiscal 2014, the company lowered its cost by $175 million, in
addition to $150 million reduced in the fourth quarter of fiscal
Best Buy's online sales performance remains a positive.
Domestic online sales jumped 7.1% during the quarter. We believe
that the company is leaving no stone unturned in wooing consumers
and capturing incremental revenue, as evident from its strategic
initiative of opening "Samsung Experience Shops" within its
It also entered into a similar agreement with
) to roll out "Windows Store" across its 500 outlets in the U.S.
with an additional 100 in Canada. For Best Buy, the deal adds
more compelling products to its portfolio to better compete
against discount giants such as
Wal-Mart Stores Inc.
) and online retailers like
Best Buy also entered into a contract to divest its 50% stake
in Best Buy Europe to Carphone Warehouse Group, the joint venture
partner in the same. The move would help the company to
concentrate more on its U.S. operations. We believe that the step
to offload its stake in Best Buy Europe would augment its return
on capital employed.
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