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Barnes & Noble, Inc. Message Board

  • StkMaven StkMaven Oct 6, 1998 11:46 PM Flag

    Another article about

    Some cofirmation of opinion that it's a good deal.

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    • This board is for BKS, or can't you read?

    • The effect on BKS's P/E multiple due to the
      increase in capital (from the IPO and Bertelsmann) will
      probably be insignificant. It is going to be difficult to
      quantify the value of B& due to the speculation of
      electronic commerce as well as the true use of the capital
      investment by Bertelsmann. We will most likely see the
      capital used for marketing and technological purposes,
      considering that B&N has not really advertised or structured
      their site in the same manner as Amazon. Therefore, the
      few hundred million won't show-up on the bottom line
      for some time.

      Stock Advantage

    • Check this

      ATTENTION Kmart (KM) shoppers. There's a new blue-light
      special. And this time, it is on the company's stock. We
      know, you are probably remembering what Dustin
      Hoffman's character in Rain Man said about the company:
      "Kmart Sucks." But Kmart recently turned up in our
      earnings revision screen, which means good things are
      happening at the store that sells everything from
      automobile tires to school supplies.

      In order for a
      stock to turn up in this screen, it must have earnings
      estimates for this year and next raised in the latest
      month, and it also must have posted four straight
      quarters of year-over-year earnings gains. Indeed, despite
      the gloomy environment now being predicted for
      retailers as a whole, estimates for Kmart�s fiscal 1998
      earnings have been raised by a penny in the last month, to
      98 cents a share. Earnings estimates for next year
      have also been raised one cent to $1.20 a share.

      In spite of that, the stock has barely budged. In
      fact, it's gone in one general direction since
      mid-June. Down. Kmart is currently trading at 11 9/16, 44%
      below its June peak and 33% lower than where it was the
      day the market decline began on July 17. That fall is
      more severe than that suffered by either Dayton Hudson
      (DH), owner of the Target chain of discount stores, or
      Wal-Mart Stores (WMT). Those stocks are off 32% and 23%
      respectively since July 17. And Kmart has the cheapest
      price/book ratio of the group. It's just 1.1.

      company is in a better position today than when we first
      recommended the stock in January," says Scott Campbell, an
      analyst with Roney Capital Markets in Detroit. Campbell
      likes Kmart because he sees signs that the turnaround
      begun last year is continuing.

      In 1997, the
      once floundering Kmart posted a profit of $249 million
      after two consecutive years of losses. This year,
      earnings for Kmart�s second quarter (ended July) increased
      to 16 cents a share from 6 cents a share last year.
      Total sales increased 3.4% and comparable store sales
      gained 4.4%. Third-quarter earnings are expected to come
      in at 10 cents a share, more than double the third
      quarter of 1997.

      It appears Kmart�s strategy of
      converting stores to its Big Kmart format is paying off.
      These Big Kmart stores devote more floor space to
      faster selling consumable products such as food and
      paper products. As a result of this changing product
      mix, sales per square foot increased from $201 in 1996
      to $210 last year (a 4.5% gain). And Campbell
      estimates that the figure is now closer to the $215-$220
      range. That�s still a far cry from the sales figures for
      Target and Wal-Mart, which Campbell estimates at $280
      and $300 plus, respectively. But Kmart still has room
      to increase that figure. So far, only half of the
      company's 2,115 stores have been converted to the Big Kmart

      The company is taking other steps to
      boost store traffic, as well. On Monday, Kmart
      announced a deal with First Data (FDC), the owner of
      Western Union, which will begin offering its money order
      and wire transfer services in Kmart stores.

      There is also evidence of improvement in Kmart's
      inventory levels. At the end of the second quarter, Kmart's
      inventory stood at $6.8 billion, slightly lower than the
      inventory level at the end of 1997�s second quarter.

      To be sure, you shouldn�t expect immediate rewards
      from Kmart, or any retailers for that matter. August
      sales figures for several retailers came in weaker than
      expected and many will report their September figures this
      week. If those numbers come in lower than anticipated,
      it could send already jittery investors into a
      further panic about the health of the retail sector as a

      But with a stock price near its book
      value and a 1998 P/E that matches the company's
      expected long-term grow

    • may I ask a couple of questions.

      "The market is wising up to this realization, and they
      are trying to give AMZN a valuation more akin to the
      book retailing industry. Considering that Barnes &
      Nobe has a P/E of 27 and Borders has a multiple of 20,
      Amazon has a ways to go."

      What will be the effect
      on BKS PE from shedding half the loss of
      and having a net gain of $100 Million for the sale of
      half. If they go ahead with the IPO and stick with the
      20% between them, wouldn't you think that the offer
      price just got boosted by the fact that the partners
      have created a much stronger company?

    • This is exactly what the web is supposed to be
      about--i.e. getting rid of the middleman. Amazon forces you
      to pay more for books then you would pay if you went
      into one of the superstores. This combo will bring
      cheaper books by starting to put the consumer directly in
      touch with the producer. After all, Bertelsman is the
      largest book publisher and also own BMG music. Barnes and
      Noble is the most successful book retailer in history
      and pioneered discount bookselling. Now that is what
      I call a killer combination.

    • yes finally!!!!!! that freaking stock never even had a chance to make a profit!!!!

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