Billionaire David Abrams Just Can’t Get Enough Of This Stock

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Barnes & Noble Education reported its first post-IPO earnings report since our last coverage, so we should take a thorough look at the financial figures buried within. The company posted sales of $239.0 million in the first quarter of fiscal 2016, up by 5.9% year-over-year. Even though this is a seasonal low quarter for Barnes & Noble Education, its comparable sales increased by 1.8% year-over-year. In the meantime, the company keeps signing new contracts, with 21 new stores opened during the quarter that are expected to generate annual sales of $45.0 million. New store openings have been a key driver of growth for the company’s business, so Barnes & Noble Education appears to be on the right track to deliver growth in the years ahead. Usually, the company operates its stores under multi-year management service agreements that grant it the right to operate the official school bookstore in exchange for a percentage of store sales. Therefore, the newly-signed contracts will surely boost the company’s sales in the upcoming quarters. Nevertheless, the year-over-year growth in sales did not assist Barnes & Noble Education in tightening its loss, which widened to $26.9 million from $26.2 million.

Given that the first quarter represents a seasonal low quarter, the fiscal 2016 second quarter results, which will be released around December 8, will provide more insights into Barnes & Noble Education Inc. (NYSE:BNED)’s long-term direction. The company’s business is highly seasonal, as the main portion of sales are realized during the second and third fiscal quarters, when college students tend to acquire or rent textbooks for the upcoming semesters. In the meantime, approximately 53% of the U.S college and university-affiliated bookstores are managed by their own institutions, so Barnes & Noble Education still sees a lot of potential in the industry. While it’s unlikely that the company will be a “blockbuster” stock that can deliver mammoth returns, it will surely represent a stable and attractive investment.

Disclosure: None

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