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With shares of Barnes & Noble (NYSE:BKS) trading at around $15.91, is BKS an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:
C = Catalyst for the Stock’s Movement
As of right now, the Nook is everything for Barnes & Noble. Nook sales continue to climb. Last quarter, Nook sales were up 5.6 percent YoY. This isn’t exceptional, but it’s still positive. What is exceptional is that the Nook, Nook HD, as well as all Nook accessories, will now be sold at Wal-Mart (NYSE:WMT). This is tremendous news for the company and its investors, especially since it’s replacing the Amazon (NASDAQ:AMZN) Kindle in the Wal-Mart display. This might benefit consumers as well considering the Nook is known for offering a better screen, better battery life, and more memory potential. While that’s positive news, consumers are falling in love with the Google (NASDAQ:GOOG) Nexus 7. This is definitely an increased threat. However, Barnes & Noble has been bullied for years and never stops fighting regardless of the threat. For instance, Barnes & Noble is now making its way into other spaces. Beginning in early 2013, the company will offer video services for movies and TV shows.
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The basic point here is that Barnes & Noble is adjusting to the times. This company will not go the way of Borders, which sat on its hands and did nothing. On the negative side, Barnes & Noble has seen profit declines for two years. Margins are also negative, and overhead is an issue. Therefore, this won’t be an easy battle. The float is 32.70 percent short, but the short position has recently decreased, which might have something to do with the Wal-Mart news.
Let’s look at some important numbers.
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