Down 13%, Is Best Buy Stock a Buy?

Down 13%, Is Best Buy Stock a Buy?

Despite reporting overwhelmingly positive second-quarter results last month, shares of consumer electronics retailer Best Buy (NYSE: BBY) tumbled. The stock is down about 13% from its peak, a reaction that doesn't mesh with the numbers.

Comparable sales soared 5.4%, the best performance in years. Online sales growth accelerated to 31.2%, proving once again that that the company is capable of going toe-to-toe with Amazon.com. Adjusted earnings per share climbed 21% to $0.69, a product of higher sales and lower operating costs relative to revenue. Full-year revenue growth guidance was boosted to 4%, up from a previous outlook of 2.5%, and operating income growth guidance was raised to a range of 4% to 9%, up half a percentage point.

What led investors to punish the stock? There were two things that seem to have contributed. First, Best Buy CFO Corie Barry, in the earnings press released, disclosed that the company planned to make additional investments during the third and fourth quarters beyond what it had previously settled on. The prospect of higher costs down the road may have rubbed investors the wrong way.

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Source: Fool.com