Is Best Buy a Good Buy or a Goodbye?

December 23, 2012

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E = Equity to Debt Ratio Is Normal

The debt-to-equity ratio for Best Buy is normal. There is a little room for improvement, but it’s not a number that should create any concern at the moment. The balance sheet, on the other hand, could use a little help.

	Debt-To-Equity	Cash	Long-Term Debt
BBY	.49	$309 Million	$2.01 Billion
AMZN	.35	$5.25 Billion	$2.68 Billion
WMT	.73	$8.64 Billion	$57.13 Billion

T = Technicals on the Stock Chart Are Weak

Investors in Best Buy over the past three years might have spent portions of their days banging their heads against a cement wall.

	1 Month	Year-To-Date	1 Year	3 Year
BBY	-11.14%	-46.40%	-45.61%	-68.36%
AMZN	10.64%	43.96%	37.48%	94.13%
WMT	1.62%	17.88%	20.89%	38.85%

At $12.05, Best Buy is currently trading below all its averages.

50-Day SMA	14.92
100-Day SMA	16.56
200-Day SMA	19.01

E = Earnings Have Dropped, But Revenue Has Increased

It comes as a shock to many people that revenue for Best Buy has actually increased on an annual basis (for the most part.) However, you will notice a significant slowdown in the pace of that growth. Earnings have dropped considerably.

	2008	2009	2010	2011	2012
Revenue ($)in billions	40.02	45.02	49.24	49.75	50.70
Diluted EPS ($)	3.12	2.39	3.10	3.08	-3.36

Looking at the last quarter on a YoY basis, we see a decrease in both revenue and earnings.

	11/2011	2/2012	4/2012	7/2012	10/2012
Revenue ($)in billions	12.10	16.32	11.61	10.55	10.75
Diluted EPS ($)	.42	-4.70	.46	.04	-.03

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