Is Best Buy Now A Good Buy?

Best Buy Co., Inc. BBY shares are jumping more than 6% in pre-market trading after the Minnesota-based electronics retailer reported better than expected earnings this morning. The company reported first quarter earnings of 35 cents per share on revenues of $10.9 billion. This was better than Wall Street analysts expected, 33 cents per share on $10.7 billion in revenues. The company said that same-store-sales fell 1.7%. Same-store-sales is a measure used to see how profitable stores open one year or more are. In addition, the company kept its full year guidance, which had been a concern of many on Wall Street. The company sees a full year adjusted profit of $3.30 to $3.55 per share on $51-$52.5 billion in revenues. Wall Street analysts are expecting $3.46 per share in earnings. So that begs the question? Is Best Buy a good buy for your portfolio now? Trading at less than 8 times next year's earnings, the stock is a value, but look a little deeper, and you will see that the underlying story isn't as black and white. One quarter does not a stock make, and while the company beat earnings estimates, the trend in the consumer electronics game is still moving towards online. Amazon.com AMZN continues to take market share. The company did say that appliance sales grew in this quarter, which could be a boon for Best Buy, as the number of appliances purchased online pale in comparison to consumer electronics. Earnings and revenue growth are slowing, or are negative year-over-year, a sign that the company may be a value trap. Shares have fallen 30% year-over-year, and the company seems to be stuck in the "big box" mentality. The "Best Buy To Go" mobile stores you see at airports, casinos, and other places are an improvement on becoming more flexible, but the products in there are not high ticket items. iPhones, iPods, and chargers are the most prevalent products in these kiosks. For now, investors in Best Buy may want to consider taking the 6% or so pop this morning, and move to the sidelines until the story gets a little clearer as to how it will stop losing market share to Amazon. Best Buy is not a "Worst Buy," but for right now, it does not look like a good buy.