Shares of electronics retailer Best Buy Inc. (NYSE: BBY) have been surging today, despite posting a decline in its fourth-quarter profit, as its earnings per share came in well above analysts' predictions. The company also issued a positive earnings outlook for fiscal 2009, sending its shares up over 2.5%.
The company said its quarterly profit dropped 3% to $737 million, from $763 million in the same period a year ago due to a slowdown in consumer spending. However, higher sales for laptop PCs and flat-panel televisions helped the company post quarterly earnings of $1.71per share, topping analysts' forecast for a profit of $1.65 per share.
Best Buy posted 4% growth for its fourth-quarter revenue, which climbed to $13.42 billion. During the period, the largest U.S. electronics retailer faced lower demand for its products as soaring gas prices and tight credit conditions put a curb on consumer spending. However, the company was able to successfully surpass those obstacles defying analysts' expectations for revenue of $13.19 billion in the third quarter, according to Thomson Financial.
Looking ahead, Best Buy showed optimism over its further earnings and forecast 2009 earnings above analysts' predictions. The retailer expects earnings in a range of $3.25 and $3.40 per share. Analysts, on average, predicted a profit of $3.31 per share.
With its positive earnings numbers, Best Buy is easily moving away from rival Circuit City Stores Inc. (NYSE: CC), proving its ability to dominate the consumer electronics market in the U.S. After facing some difficult time during the first months of this year, I expect to see a nice rebound for the company's shares in the coming months.
Eliza Popescu is a financial writer for the online investment advisory service Investor's Observer.
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