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.

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Companies

Symbol Name Price Change % Volume
AMZN Amazon.com Inc. 770.42 5.70 0.75 3,684,906
BBY Best Buy Co. Inc. 48.52 1.59 3.39 5,970,938
NFLX Netflix Inc. 125.39 0.82 0.66 8,204,687
OGSRW Overseas Shipholding Group Inc (New) Wt Cl A Exp 0 1.40 0.00 0.00 0

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