Financial Trading Blog
Stock of the day 03/12/2014 – Barnes & Noble
2014 has been a volatile year for Barnes & Noble on the markets, with its shares chart looking like the proverbial rollercoaster. It reached its yearly peak in September, hitting $24.19, after lows of $13.29 in February. However this September high was swiftly followed by a decline to $17.92 by mid-October, only to rally again by the end of November to $24.19. This recent rally-fall-rally pattern epitomises this year for Barnes & Noble, as the bookseller attempts to steady itself after seeing profits decline since 2010.
The company has been on the end of some positive sentiment from authors and publishers after Amazon’s dispute with Hachette, reflected in Barnes & Nobles’ recent 500,000 strong collection of signed books from authors like Hilary Clinton and Dan Brown, providing customers with products that its electronic competitors cannot supply.
Barnes & Noble is doing its best to operate profitably, meaning it is attempting to distance itself from the dismal sales of its eReader NOOK. Its retail stores and barnesandnoble.com are set to split from the company’s college stores, alongside the NOOK media division, in order to boost profit margins. The company has also had great success diversifying its products, with a 12% increase in sales of toys and games helping margins.
Shares look set to turn a profit for the first time since 2010 at $0.31 per share, despite predicted 3% decline in revenue this quarter, from $1.73 billion to $1.69 billion, and projected yearly revenue of $6.09 billion. However, share prices fell by 5% this Monday to $22.19, with a further 1% drop in Tuesday to $21.95, suggesting a less than stellar Black Friday and Cyber Monday.
Zacks recently downgraded shares of the book store from ‘outperform’ to ‘neutral’, with a target price of $24.20. Despite this, Barnes & Nobles have managed to last longer than many expected, and some smart decisions like stock diversification and reducing the importance of the NOOK means that the bookseller still stands a chance of remaining a presence on US streets for years to come.
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