http://www.profitableinvestingtips.com/investing/best-buy-recovers
Best Buy Recovers
The consumer electronics company Best Buy came in with earnings twenty fold higher than for the same period a year ago. The survival of Best Buy was in question a year ago but cost cutting measures and a successful approach to online sales has allowed the company to triple its stock price from just seven months ago. After financials were announced the stock beat expectations and gapped up another four dollars a share. The company credits three changes for their renewed success. Best Buy has dedicated areas of its stores to the likes of Apple and Samsung. It has chosen to match prices when competitors have sales. And, Best Buy has invested heavily in training and retraining its employees. Online sales have gone up over ten percent in the last year as well. Price matching applies to its online sales as well as purchases in store. The main competitor for the price matching strategy has been Amazon. Although same store sales fell slightly it was an improvement over greater reductions in sales in previous years. Cost reductions easily made up the difference.
Where Best Buy Has Come From
Fundamental analysis of Best Buy a year ago told most investors to sell. They did this and took the stock from $20 a share to $12. The recession and other factors caught up with Best Buy - BBY. Costs were and profits were down. Amazon.com, the killer of bricks and mortar retailers, was taking away business. Market sentiment was such that folks assumed the worst and took the price down. There was speculation that Best Buy would follow Circuit City into oblivion. This company has been selling consumer electronics for a quarter of a century. It is the result of a name change of a music store, Sound of Music. Best Buy now sells nearly a fifth of the consumer electronics sold in the USA and has branches in Canada, Mexico, Puerto Rico, and China. It had gross revenues of around $16 Billion a year but had seen its profit slip from the $700 million range to the $600 million range. Then Best Buy started to close stores. Luckily the company had little debt giving it a margin of safety. It did not have to downsize to relieve itself of a debt burden. It simply closed its least profitable stores. Because the founder still owned twenty percent of the company it was unlikely that a hostile takeover would succeed. As Best Buy recovers this prospect diminishes with each increase in stock price.
Is Best Buy a Good Buy Today?
As Best Buy recovers it is no longer an issue of investing in buyout prospects. The days of Best Buy opening more and more stores and filling them with customers is probably gone. But it appears as though the price matching policy for online sales and the fact that they successfully advertised that policy have helped keep Amazon.com at bay for the time being.
2. The consumer electronics company
Best Buy came in with earnings
twenty fold higher than for the
same period a year ago.
By: http://www.profitableinvestingtips.com/investing/best-buy-recovers
3. The survival of Best Buy was in
question a year ago but cost
cutting measures and a successful
approach to online sales has
allowed the company to triple its
stock price from just seven months
ago.
By: http://www.profitableinvestingtips.com/investing/best-buy-recovers
4. After financials were announced
the stock beat expectations and
gapped up another four dollars a
share. The company credits three
changes for their renewed success.
By: http://www.profitableinvestingtips.com/investing/best-buy-recovers
5. Best Buy has dedicated areas of its
stores to the likes of Apple and
Samsung. It has chosen to match
prices when competitors have
sales. And, Best Buy has invested
heavily in training and retraining
its employees.
By: http://www.profitableinvestingtips.com/investing/best-buy-recovers
6. Online sales have gone up over ten
percent in the last year as well.
Price matching applies to its online
sales as well as purchases in store.
The main competitor for the price
matching strategy has been
Amazon.
By: http://www.profitableinvestingtips.com/investing/best-buy-recovers
7. Although same store sales fell
slightly it was an improvement
over greater reductions in sales in
previous years. Cost reductions
easily made up the difference.
By: http://www.profitableinvestingtips.com/investing/best-buy-recovers
8. Where Best Buy Has Come From
By: http://www.profitableinvestingtips.com/investing/best-buy-recovers
9. Fundamental analysis of Best Buy a
year ago told most investors to sell.
They did this and took the stock
from $20 a share to $12.
By: http://www.profitableinvestingtips.com/investing/best-buy-recovers
10. The recession and other factors
caught up with Best Buy - BBY.
Costs were and profits were down.
Amazon.com, the killer of bricks
and mortar retailers, was taking
away business.
By: http://www.profitableinvestingtips.com/investing/best-buy-recovers
11. Market sentiment was such that
folks assumed the worst and took
the price down. There was
speculation that Best Buy would
follow Circuit City into oblivion.
This company has been selling
consumer electronics for a quarter
of a century.
By: http://www.profitableinvestingtips.com/investing/best-buy-recovers
12. It is the result of a name change of
a music store, Sound of Music. Best
Buy now sells nearly a fifth of the
consumer electronics sold in the
USA and has branches in
Canada, Mexico, Puerto Rico, and
China.
By: http://www.profitableinvestingtips.com/investing/best-buy-recovers
13. It had gross revenues of around $16
Billion a year but had seen its
profit slip from the $700 million
range to the $600 million range.
Then Best Buy started to close
stores.
By: http://www.profitableinvestingtips.com/investing/best-buy-recovers
14. Luckily the company had little
debt giving it a margin of safety. It
did not have to downsize to relieve
itself of a debt burden. It simply
closed its least profitable stores.
By: http://www.profitableinvestingtips.com/investing/best-buy-recovers
15. Because the founder still owned
twenty percent of the company it
was unlikely that a hostile takeover
would succeed. As Best Buy
recovers this prospect diminishes
with each increase in stock price.
By: http://www.profitableinvestingtips.com/investing/best-buy-recovers
16. Is Best Buy a Good Buy Today?
By: http://www.profitableinvestingtips.com/investing/best-buy-recovers
17. As Best Buy recovers it is no longer
an issue of investing in buyout
prospects. The days of Best Buy
opening more and more stores and
filling them with customers is
probably gone.
By: http://www.profitableinvestingtips.com/investing/best-buy-recovers
18. But it appears as though the price
matching policy for online sales
and the fact that they successfully
advertised that policy have helped
keep Amazon.com at bay for the
time being.
By: http://www.profitableinvestingtips.com/investing/best-buy-recovers
19. Best Buy has an advantage that a
totally online sales competitor does
not have. It has stores where you
can take your recently purchased
merchandise for questions. Geek
Squad tech support at Best Buy is a
winner and tends to bring satisfied
customers back for more.
By: http://www.profitableinvestingtips.com/investing/best-buy-recovers
20. In the end a well trained staff and
competitive pricing will probably
help the company. Sound
investment advice is probably to
keep watching this company for
increased profits and a higher
stock price as Best Buy recovers.
By: http://www.profitableinvestingtips.com/investing/best-buy-recovers
