Why Best Buy is destined to fail
Electronics retailer Best Buy (BBY +0.36%, news)is headed for the exits. I can't say when exactly, but my guess is that it's only a matter of time, maybe a few more years.
Consider a few key metrics. Despite the disappearance of competitors including Circuit City, the company is losing market share. Its last earnings announcement disappointed investors. In 2011, the company's stock has lost 40% of its value. The forward price-to-earnings ratio is a mere 6.23 (industry average is 10.20). Its market cap down to less than $9 billion. Its average analyst rating, according to The Street.com, is a B-.
Those are just some of the numbers, and they don't look good. They bear out a prediction in March from The Wall Street Journal's "Heard on the Street" column that "the worst is yet to come" for Best Buy investors. With the flop of 3-D televisions and the expansion of Apple (AAPL -0.16%, news)own retail locations, there was no killer product on the horizon that would lift Best Buy from the doldrums. Though the company accounts for almost a third of all U.S. consumer electronics purchases, analysts noted, it remains a ripe target for more nimble competitors.
Read the full article here.
Consider a few key metrics. Despite the disappearance of competitors including Circuit City, the company is losing market share. Its last earnings announcement disappointed investors. In 2011, the company's stock has lost 40% of its value. The forward price-to-earnings ratio is a mere 6.23 (industry average is 10.20). Its market cap down to less than $9 billion. Its average analyst rating, according to The Street.com, is a B-.
Those are just some of the numbers, and they don't look good. They bear out a prediction in March from The Wall Street Journal's "Heard on the Street" column that "the worst is yet to come" for Best Buy investors. With the flop of 3-D televisions and the expansion of Apple (AAPL -0.16%, news)own retail locations, there was no killer product on the horizon that would lift Best Buy from the doldrums. Though the company accounts for almost a third of all U.S. consumer electronics purchases, analysts noted, it remains a ripe target for more nimble competitors.
Read the full article here.
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