Barnes & Noble, Inc. (BKS): Keep Reading

Barnes & Noble maintains that its new color e-readers won’t directly compete with the iPad, but didn’t elaborate.You see, the company believes there are plenty of people who don’t want or need all the bells and whistles of an iPad and will be very content with a no-frills color Nook e-reader.

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With nearly two-thirds of the country’s bricks-and-mortar retail space, Barnes & Noble is the dominant book retailer in the U.S. Its stores are projected to produce some $300 million in earnings and $200 million of free cash flow in the current fiscal quarter. Based on a modest multiple of four on this year’s estimated pre-tax flow, shares could be worth at least $19.

Barnes & Noble has a solid balance sheet that boasts net cash of $73 million. The company’s cumulative market value is slightly more than $1 billion. Maxim Group analyst John Tinker, who recently reiterated his Buy rating on shares, has a $30 price target.

That why shareholders shouldn’t give up on Barnes & Noble yet. Just like a good book that’s opened with expectations and closed with profits, Barnes & Noble could also pleasantly surprise.

The article Don’t Close the Book on Barnes & Noble originally appeared on Fool.com.

Diane Alter has no position in any stocks mentioned. The Motley Fool recommends Amazon.com and Apple. The Motley Fool owns shares of Amazon.com and Apple. 

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