Gathering momentum from the better-than-expected first-quarter
fiscal 2014 bottom-line results, shares of
Best Buy Company, Inc
) surged to attain a new 52-week high of $28.26 on May 31, 2013,
before closing at $27.55. This Zacks Rank #3 (Hold) stock has
generated a year-to-date return of approximately 135%.
Based on the current price, this online and brick and mortar
electronic retailer is 6.9% above the Zacks Consensus average
analyst price target of $25.77. The company currently trades at a
forward P/E of 12.05x, a 5.6% discount to the peer group average
Best Buy came out with the results for the recently concluded
quarter on May 21, wherein quarterly earnings of 32 cents a share
surpassed the Zacks Consensus Estimate of 25 cents.
The company 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
quarter, Best Buy has successfully lowered its cost by $175
million, in addition to $150 million reduced in the fourth
quarter of fiscal 2013. Moreover, 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 stores.
Best Buy had 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, which has been facing
stiff competition from industry bellwethers such as
Wal-Mart Stores Inc.
). We believe that the step to offload its stake in Best Buy
Europe would augment its return on capital employed.
American Express Company
) achieved a new 52-week high of $77.39 on May 31, 2013.
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