Best Buy Co., Inc. (BBY) Stock Soars on Samsung Experience Shop Deal

But Best Buy stock seems pricey
As I wrote last month, analysts predicting Best Buy’s demise have gotten ahead of themselves. The introduction of price-matching in the U.S. had a clear positive impact on the company’s results last quarter, and Best Buy’s decision to continue matching competitors’ prices year-round should help it compete more effectively with Amazon in the future. Nevertheless, I do not think the company’s fundamentals support the Best Buy stock price of $25.13 (as of Thursday’s close).

Analysts expect Best Buy to post another double-digit decline in EPS this year, to $2.16. After Thursday’s rally, Best Buy stock trades at nearly 12 times expected earnings, which is quite expensive for a company with stagnant-to-falling sales and earnings. If Best Buy’s turnaround hits any bumps in the next year, the stock could easily drop back below $20. Shareholders might therefore want to take advantage of the recent rally to take profits or cut their losses.

The article Best Buy Stock Soars on Samsung Experience Shop Deal originally appeared on Fool.com is written by Adam Levine-Weinberg.

Fool contributor Adam Levine-Weinberg owns shares of Apple and is short shares of Amazon.com. The Motley Fool recommends Amazon.com and Apple. The Motley Fool owns shares of Amazon.com and Apple.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.