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Best Buy (BBY) is up over 6% at the time of this writing, yielding a quote of $36.77; volume is awesome. What a nice bit of price action for the retailer. And if you did an earnings trade with this one, congratulations, you made some money.If you look at the electronics retailer's chart, you'll see something of a scary picture. The shares peaked near the latter part of April after reaching a 52-week high of $48.83. Since then, the stock has been in a downtrend.
Perhaps a change is in the air, however. According to this article, earnings of 60 cents per share came in way ahead of the consensus estimate; it was set at 46 cents per share. Management also raised the outlook for the full fiscal year.
Hold on, though, because there is one negative element to the story. Same-store sales didn't budge at all. Comps growth is very important to this sector, and Best Buy needs that metric to be in better shape. It should be noted, however, that at this time last year, comps had declined nearly 4%. So there was an improvement.
If you did in fact do an earnings trade with the stock, you probably should sell out and take your profit. But, if you bought a while back with a long-term horizon, it might not be a bad idea to hold on. Trey Thoelcke's preview piece from Monday indicates that Best Buy recently increased its dividend and is possibly set to expand net income over time at a better rate than competitor Wal-Mart (WMT). Make your own decision about the stock after carefully considering all the pros and cons.
Disclosure: I don't own any company mentioned; positions can change without notice.
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