Best Buy Shines Bright, Even in Weak Economy

Chad Brand submits:

Back in November I wrote that Best Buy (BBY) would be a prime beneficiary of Circuit City’s bankruptcy and given that they were already one of the best run retailers in the country, the stock was cheap at a single digit P/E (around $25 per share). Yesterday Best Buy reported blowout fourth quarter earnings and predicted 2009 earnings of $2.50 to $2.90 per share, which is well above current estimates of below $2.50.

Best Buy shares closed at $37.67 yesterday, a 12.58% increase, which brings the gain since November to over 50 percent. If you have been riding this trend, the shares look close to fair value from my perspective. Taking the middle of the earnings guidance

range and applying a 15 P/E (a bit higher than I would choose normally, due to the recession) I get fair value of about $40 per share, so it appears the stock’s huge move is largely behind us.

Complete Story »
Go to Source

More Information: