Is Best Buy’s Stock a Buy After These Earnings Results?

With shares of Best Buy (NYSE:BBY) now trading below $15, is BBY a BUY, a WAIT and SEE, or a STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock’s Movement:

Best Buy has one key driver affecting its future: the impending takeover by the company’s founder Richard Schulze.

Schulze, whose initial proposal to take the company private was rejected by the board, will submit his final plan by mid-December, after the critical holiday shopping season is well underway. In August, he said he would buy the company for $24 to $26 per share, which would value the company between $8.16 billion and $8.84 billion. However, analysts believe that Schulze’s final offer will be considerably lower than planned, as the electronics retailer’s stock price has fallen by more than 25 percent since the original offer was made. Best Buy’s shares have followed a predominantly downward trend over the last few months, and the company suspended its earnings guidance for the quarter because of its “low expectations for industry wide sales” on August 21.

Best Buy’s poor third-quarter results, which were released on November 20, revealed just how worrisome the company’s depressed sales have become. As Reuters reported, the weak results and chief executive Hubert Joly’s unspecific turnaround plan have made some Best Buy investors “more willing to consider a buyout offer from Schulze.”