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Best Buy Downgraded to Strong Sell

BBY CONN

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Zacks Investment Research downgraded Best Buy Company Inc. (BBY - Analyst Report) to a Zacks Rank #5 (Strong Sell) on January 8.

Why the Downgrade?

Best Buy has witnessed sharp downward estimate revisions after reporting disappointing third-quarter 2013 results. The company has long been struggling with dwindling sales in key categories including televisions, notebooks, digital imaging and gaming devices, which in turn, is taking a toll on the company’s same store sales results.

Moreover, shares of this consumer electronics retailer have been portraying a sharp downward trend in the past one year, reflecting the company’s sluggish performance.

On November 20, 2012, Best Buy reported third-quarter 2013 earnings per share of 3 cents, plummeting 94% from 47 cents earned in the comparable prior-year quarter and missed the Zacks Consensus Estimate of 12 cents.

Though the company’s holiday sales were not as bad as expected, Best Buy’s total revenue for the 9 weeks period ended Jan 5, 2013, came in at $12.8 billion, down from $12.9 billion for the 9 weeks period ended Dec 31, 2011. Moreover, comparable-store sales inched down 1.4% during the period.

The Zacks Consensus Estimate for the fourth quarter of 2013 and fiscal 2013, plunged 16.4% and 13.8%, respectively to $1.48 and $2.44 per share over the past 60 days. Moreover, for fiscal 2014, most of the estimates were revised downward over the last 60 days, lowering the Zacks Consensus Estimate by 20.5% to $2.17 per share.

The Other Stock to Consider

Not all the consumer electronics retailers are performing as poorly as Best Buy. Conns Inc. (CONN - Snapshot Report), which holds a Zacks Rank #1 (Strong Buy) is worth considering. 

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