Can Best Buy Earnings Save Its Stock? (BBY, CC)

On Wednesday we’ll get to see earnings out of Best Buy Co. Inc. (NYSE: BBY). The estimates from First Call are $1.65 EPS on $13.18 billion in revenues.  Next quarter estimates are $0.39 EPS on $8.58 billion in revenues. Estimates for fiscal Feb-2009 are $3.35 EPS on $43.08 billion in revenues.  These numbers may change by Wednesday morning.

Best Buy Co.’s 52-week trading range is $38.75 to $53.90. Analysts have an average price target north of $52.00 and shares closed at $40.56 on Friday.  Year-to-date, its shares are down close to 25%. We recently noted a Banc of America downgrade in the stock.

Normally we’d say to watch Circuit City (NYSE: CC) as well, but that company is so far imploded that a great Best Buy number would be interpreted as at Circuit City’s loss and a bad report from Best Buy would just imply things are bad there too.

One note that we’d like to point out is that while the stock is close to a 52-week low, these prices are close to lows not seen since mid-2005.  If $40.00 doesn’t act as a base for this electronics and appliances retail giant, then seeing this test $35.00 is not out of the realm of possibilities.  Much weak consumer spending should be factored in already, but Wall Street has been very bad in recent months of pricing in good news or bad news ahead of time.

Jon C. Ogg
March 30, 2008

Jon Ogg produces the Special Situation Investing Newsletter and he can be reached at [email protected]; he does not own securities in the companies he covers.