Best Buy Focuses on U.S. Stores, Mobile Sales
Best Buy’s (NYSE:BBY) recent announcement of the purchase of its British partner’s mobile phone joint venture is likely to have a positive impact on the company, and help it boost earnings in this all-important marketplace. The $1.3 billion purchase of Carphone Warehouse should result in an almost immediate bump in revenue. The joint venture has taken off with sales of smartphones such as Apple’s (NASDAQ:AAPL) iPhone and others. And now that Best Buy doesn’t have to share 50% of the revenues from this high margin business, it should greatly improve profitability. With 10% of the company’s value coming from the Mobile Phone Stores division according to Trefis estimates, the company correctly views this as an important area for potential growth.
See Full Analysis for Best Buy Here
- Despite Weak Sales, Best Buy’s Stock Up 12%: What’s Going On?
- With Q2 Earnings Around The Corner, Will Best Buy Stock Live Up To Its Name?
- Down 7% This Year, Will Best Buy Stock Recover Following Q1 Results?
- Flat Since The Beginning of 2023, What’s Next For Best Buy’s Stock Post Q4 Results?
- Down 15% This Year, Where Is Best Buy Stock Headed Post Q3?
- What To Expect From Best Buy’s Stock Post Q2?
U.S. Retail Market Focus
In addition to the Carphone Warehouse deal, Best Buy has opted to scale back on plans for international expansion. With nearly 64% of the Trefis price estimate coming from U.S. retail stores, the idea of diversifying seemed sound. However, a soft European retail marketplace and some pretty stiff competition in the States from stores like Wal-Mart (NYSE:WMT) and Target (NYSE:TGT) has left the company with few options. Recent forays into Turkey and China both ended without any moves.
The plan is to use the recently purchased stores to branch out beyond smartphones to include notebooks, eReaders and smart TVs. With the ability to use existing employees in the expansion of offerings, Best Buy is expecting only a slight impact on overhead.
Carphone Warehouse Could Provide Upside to Price Estimate
The $35 Trefis price estimate for Best Buy’s stock is about 30% ahead of the current market price. With growth in the burgeoning smartphone marketplace, a focus on the company’s core revenue-generating division and the immediate earnings bump from a solid acquisition, Best Buy appears to be well-positioned.
Understand How a Company’s Products Impact its Stock Price at Trefis
This article was submitted as part of our Trefis Contributors program. Email us at contributors@trefis.com if you’re interested in participating.