Top Performer for Wed: Barnes & Noble (BKS)

Shares and earnings estimates for Barnes & Noble, Inc. (BKS - Snapshot Report) are on the rise as the bookseller heads to its fiscal second-quarter report tomorrow.

With a gain of about 5.5%, BKS is a Zacks #1 Rank Top Performer for Wednesday. Volume is nearly 1.2 million shares, which is above its daily average of approximately 950,000.

BKS is part of the very broad retail-miscellaneous/diversified industry. It is 1 of 5 companies from that space on today's 232-stock Zacks #1 Rank List, but none of the other companies are booksellers. (This eclectic group includes home products retailer Bed Bath & Beyond Inc. (BBBY - Snapshot Report), equestrian products specialty retailer Dover Saddlery, Inc. (DOVR - Snapshot Report), crafts specialty retailer Jo-Ann Stores, Inc. (JAS - Snapshot Report) and farm products company Tractor Supply (TSCO - Analyst Report).)

Earnings Estimates

BKS has enjoyed upward revisions from analysts in the past 7 days. The Zacks Consensus Estimate for this fiscal year, ending January 2010, is at $1.35 per share, which is up 3.8% from $1.30 in the past week. Meanwhile, the Zacks Consensus Estimate for next fiscal year, ending January 2011, has advanced 5.1% from $1.37 in that time.

Therefore, analysts currently expect profit for next fiscal year to advance about 6.6% from this fiscal year.

Earnings estimates have been on the rise for a while now. In fact, the past 2 months have seen gains of 8.9% and 11.6% for this fiscal year and next, respectively.

Barnes & Noble College Booksellers

BKS made some news earlier this month when it announced an agreement to acquire Barnes & Noble College Booksellers, Inc. for $596 million.

B&N College Booksellers has a leading market position in the $10 billion college bookstore industry. For fiscal 2009, it generated revenue of $1.8 billion and same-store sales growth of 1%.

This acquisition will provide BKS with a stake in the growing digital textbook space; an important avenue for the company given the very challenging conditions for booksellers.

"In a rapidly changing environment, both companies will benefit from a unified digital platform and brand, which will enable the combined company to capitalize on the growing online college textbook and electronic book markets," said Irene Miller, Chairperson of the Special Committee of the Board.

(The Special Committee was established by the BKS Board of Directors due to the related-party nature of the transaction.)

Fiscal First Quarter

BKS reported a loss of 4 cents per share for its fiscal first quarter, which bettered the Zacks Consensus Estimate of a 15-cent loss by more than 73%.

The result also exceeded the company's guidance, thanks to better-than-expected revenues, gross margins and expense management.

Total sales declined 4% to $1.1 billion. Barnes & Noble store sales of $989 million were down 3.5%, while same-store sales declined 5.7%. Sales at Barnes & Noble.com were off 7%.