Turnaround Stock Best Buy (BBY) Plunges on Poor Holiday Outlook

Jacob Harper |

Best Buy Inc. (BBY) stumbled on Nov. 19 after the big box electronics retailer reported third quarter earnings, which showed they expect competition to be incredibly stiff in the important 2013 holiday shopping season.

The stock plunge represented a blemish on an otherwise sparkling year, which has seen Best Buy outperform all other stocks on the S&P 500.  Best Buy has largely silenced doubting Thomases who last year had proclaimed the big box chain doomed, slain by internet behemoth Amazon Inc. ($AMZN).



Best Buy continued to surprise in their third quarter earnings report, reversing a year-over loss and beating analyst profit expectations, largely due to wide-sweeping cost cutting measures. However, the profit increases were not enough to offset the admission from the company faced a tough year end.

The turnaround from Best Buy has been nothing short of astonishing, as the company has posted a YTD gain of 274.55 percent, slightly better than the red-hot Netflix Inc. ($NFLX). But despite their success in 2013, Best Buy’s worrying guidance heading into the year-end shopping bonanza spooked investors.

For their third quarter earnings report, Best Buy reported a net gain of $54 million, or $0.16 per share, versus the net loss of $10 million, or $0.03 per share, from the same period a year ago. Revenue for the quarter was $9.36 billion, as compared to $9.38 billion from the same quarter the previous year. Analysts were expecting a net profit of $0.11 a share on revenues of $9.36 billion.

Best Buy’s shares shed a considerable amount of value on the expected upcoming competition, losing 8.84 percent in midday trading to hit $39.71 a share.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
AMZN Amazon.com Inc. 845.24 -6.95 -0.82 3,687,963
BBY Best Buy Co. Inc. 45.56 1.25 2.82 6,789,020
NFLX Netflix Inc. 143.25 0.47 0.33 3,302,714
OGSRW Overseas Shipholding Group Inc (New) Wt Cl A Exp 0 1.40 0.00 0.00 0

Comments

Emerging Growth

Reliq Health Technologies Inc.

Moseda Technologies Inc provides mobile and IT cloud computing to increase operational efficiency and security. It develops SmartFleet, a solution designed for commercial use, as well as SmartCare, a mHealth…

Private Markets

GoCoin

Blockchain currencies (e.g. Bitcoin) provide a new disruptive way to transfer value between parties over the internet as opposed to going through banks. GoCoin provides online merchants with a suite…

BioSculpture Technology, Inc.

BioSculpture Technology, Inc. (“BST”) is a commercial-stage medical device manufacturer of liposuction surgical instruments for surgeons. It offers the FDA-cleared Twin Cannula Assisted Liposuction ("TCAL") Airbrush Liposculptor II® controllers, Airbrush®…