Barnes & Noble: Zacks’ Bear of the Day Play

I’m a little torn about today’s Bear of the Day. I don’t want to throw shade on a place I genuinely appreciate hanging out at. Heck, I remember when heading to one of their locations was the thing to do. Grabbing a coffee and reading magazines while you hang out with your buddies. Ah, the good ole days. That’s just the thing though, that was then, this is now. Competitors have carved this place up and left it as a carcass of its old self.

Barnes and Noble (BKSSnapshot Report) is scraping barrel bottom here as a Zacks Rank #5 (Strong Sell) in an industry that ranks in the Bottom 29% of our Zacks Industry Rank. Those competitors I was talking about, how about a little company by the name of Amazon (AMZNAnalyst Report). It’s tough to keep on cranking out the hits when you’ve got the genius of Jeff Bezos aiming to take you out.

The funny part is, Amazon has already dealt most of the damage it’s going to on Barnes and Noble. I mean, it’s 2015 already. Not like online book-selling is anything new. Plus, AMZN has moved on to bigger and better things like the cloud. Books are so…1998.

That may be the reason why shares have struggled also. As people look to the digital medium more and more for their content the old school business of books is lagging behind. It’s a shame too because there’s something about the smell of all those books that makes me feel smarter.

What smarts though is last quarter’s abysmal report. Our Zacks Consensus Estimate called for 12 cents EPS. BKS came in with a 68 cent LOSS. That’s following a 37 cent loss the previous quarter and two quarterly disappointments before that. No wonder the consensus for the current quarter has dropped from a 24 cent EPS estimate all the way down to a 30 cent loss. Not heading in the right direction there.

Investors looking for other ideas in the same industry can look at Zacks Rank #1 (Strong Buy) Build-a-Bear (BBWSnapshot Report) or Zacks Rank #2 (Buy) Ulta Salon (ULTASnapshot Report). 

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