Gaining momentum from better-than-expected second-quarter
fiscal 2014 bottom-line results, shares of
Best Buy Company, Inc
) surged to attain a new 52-week high of $36.14 on Aug 28, 2013,
before closing at $35.81. This Zacks Rank #2 (Buy) stock has
generated a year-to-date return of approximately 207.4%.
Based on the current price, this online and brick and mortar
electronic retailer is 5.6% above the Zacks Consensus average
analyst price target of $33.91. The company currently trades at a
forward P/E of 15.2x, a 33.0% discount to the industry average of
Best Buy posted the results of the recently concluded quarter
on Aug 20, in which quarterly earnings of 32 cents per share
surpassed the Zacks Consensus Estimate of 12 cents.
The company is carrying out a turnaround program that includes
price match policy, multi-channel strategy, multi-year cost
reduction program and closing of some big box stores. In the said
quarter, Best Buy succeeded in lowering its cost by $65 million,
thereby bringing the total reduction to $390 million out of $725
million targeted from the North American business.
Moreover, the company is leaving no stone unturned in wooing
consumers and garnering incremental revenues, as evident from the
strategic initiative of opening "Samsung Experience Shops" within
Best Buy also completed the divestment of its 50% stake in
Best Buy Europe to the latter's joint venture partner, Carphone
Warehouse Group. The move will help the company to concentrate
more on its U.S. operations, which have been facing stiff
competition from industry bellwethers such as
Wal-Mart Stores Inc.
). We believe that the company's step of offloading its stake in
Best Buy Europe will augment its return on capital employed.
) achieved a new 52-week high of $77.05 on Aug 28, 2013.
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