Stay Away From This Retailer: Barnes & Noble, Inc. (BKS), Amazon.com, Inc. (AMZN)

Competitors

Nook’s biggest competitor in the tablet/e-book market is Amazon’s Kindle. With a 45% share in the e-book market, Amazon currently leads it. Amazon.com, Inc. (NASDAQ:AMZN) has been keen on selling its Kindle tablets at cost, as the long-term plan is to sell more e-books, music, video games and apps through Kindle. Given the fact that Amazon has recently been really successful in selling its digital content via Kindle, the strategy appears to be working for the company.

As far as earnings are concerned, analysts expect Amazon to keep on growing its profits in the coming years. A mean recommendation of 2 shows that the Amazon.com, Inc. (NASDAQ:AMZN) is one of the top buys in the retail sector.

Just like Kindle, Google’s Nexus has done really well over the past few months. During the holiday season in Japan, Nexus 7 became the best selling tablet by overtaking Apple’s iPad mini. Nexus 7 enjoys a healthy share of 44.4% in the Japanese market, as opposed to the iPad mini’s 40.1%. Nexus’ low price relative to the iPad mini was the main reason behind this success. Google is trading at a forward P/E of 15.09, and has a strong PEG of 1.28. It has a mean recommendation of 2, making it one of the best buys in the market.

Conclusion

As Nook faces severe competition from products such as the Kindle, the Nexus and the iPad mini, the future doesn’t look that bright for the retailer. Barnes & Noble’s rivals not only offer a vast range of content and apps for readers on their tablets, but have also improved a lot on their e-reading functions. As a result, customers are moving away from the Nook.

Lesser Nooks sold means lesser digital content sold in the long run, which in turn would amplify the company’s losses. Further, the company’s declining sales at its college bookstores give a clear signal that people are steadily moving towards e-books. As far as the e-book market is concerned, Barnes & Noble stands nowhere in comparison to the market leader–Amazon.com, Inc. (NASDAQ:AMZN). This reiterates the fact that the company’s future looks bleak. In short, I don’t recommend buying Barnes & Noble.

The article Stay Away From This Retailer originally appeared on Fool.com and is written by  Waqar Saif.

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