Minneapolis-based electronics retailer Best Buy Inc. (BBY) is scheduled to report its fiscal fourth quarter 2010 results before the market opens on Thursday, March 25. Based on our analysis, Best Buy is expected to report results that are slightly better than Wall Street's consensus expectations.
Consensus Expectations
The average consensus estimate by analysts is for revenue of $16.05 billion and $1.79 per share in earnings. Excluding special items for restructuring, Best Buy's earnings per share was $1.61 with revenue of $14.72 billion for the fiscal third quarter.
We are forecasting revenues of $16.2 billion and earnings per share of $1.80, slightly higher than the consensus estimate. This would represent a 10 percent growth in revenue from the fiscal third quarter of $14.72 billion.
Earlier this week, Janney Capital Markets reiterated its BUY estimate for Best Buy, raising the fair market value to $48 from an earlier target of $44 per share. Yesterday, Guy Adami from CNBC's Fast Money show recommended going long on Best Buy.
Investors are also very interested in Best Buy's guidance for its fiscal 2011 when it issues fourth-quarter results tomorrow.
Best Buy is a specialty retailer of consumer electronics, home office products, entertainment software, appliances, and related services. Demand for electronics is improving. Best Buy reported strong sales in December, particularly for phones, TVs, and computers and can be expected to expand on recent gains in market share. Some analysts see continued decline in international sales, putting some pressure on overall sales.
Share Performance
Since the beginning of 2010, Best Buy's shares have gained 5.1 percent. The stock closed yesterday at $41.51.
Valuation
Shares are now trading at a 12.3x forward price earnings ratio for consensus 2011 earnings per share. This is a discount to the valuations of major competitors like Wal-mart (WMT) at 12.8x, and Amazon.com (AMZ), with its hot-selling Kindle at 33.7x forward price to earnings ratios. Best Buy remains an attractive company based on peer valuation.
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