Best Buy Co., Inc.
) surged to attain a new 52-week high of $44.34 on Nov 11, 2013,
before closing at $44.33. Shares of this Zacks Rank #1 (Strong
Buy) stock have amassed a year-to-date return of roughly 282.5%.
Based on the current price, this online and brick and mortar
electronic retailer is 5.5% above the Zacks Consensus average
analyst price target of $42.00. The company currently trades at a
forward P/E of 18.3x, a 28.2% discount to the industry average of
Best Buy is undergoing a turnaround program including the price
match policy, multi-channel strategy, multi-year cost reduction
program and closing of some big box stores. Its 'Revenue Blue'
project is expected to minimize costs. Best Buy, in
second-quarter fiscal 2014, successfully slashed expenses by $65
million, thereby bringing the total reduction to $390 million out
of $725 million targeted from the North American business.
Management is undertaking a competitive pricing strategy and
making investments in areas such as online, mobile, the
multi-channel approach, optimum utilization of floor area and
refurbishment of its website (bestbuy.com) functionality. The
company also initiated the "buy online -- ship from store"
Best Buy's online sales performance remains a positive. Domestic
online sales came in at $477 million, while comparable online
sales rose 10.5%. We believe that the company is leaving no stone
unturned in wooing consumers and growing incremental revenues, as
evident from its strategic initiative of forming a partnership
with Samsung and opening "Samsung Experience Shops" within its
Moreover, Best Buy 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. This will help the company to
add more compelling products to its portfolio, which will
consequently enable to compete with players like
Wal-Mart Stores Inc.
) and online retailers like
Best Buy also completed the divestiture of its 50% stake in Best
Buy Europe to Carphone Warehouse Group, the joint venture partner
in the same. The move will enable the company to concentrate more
on its U.S. operations and increase its return on capital as
well. Hence, the stock looks promising.
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