1-Star Stocks Poised to Plunge: Barnes & Noble?
Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, book retailer Barnes & Noble (NYS: BKS) has received the dreaded one-star ranking.
With that in mind, let's take a closer look at Barnes & Noble's business and see what CAPS investors are saying about the stock right now.
Barnes & Noblefacts
|Headquarters (Founded)||New York (1986)|
|Market Cap||$845 million|
|Trailing-12-Month Revenue||$7.01 billion|
|Management||Founder/Chairman Leonard Riggio|
CEO William Lynch
|Trailing-12-Month Return on Equity||(7%)|
|Cash/Debt||$23.6 million / $274.9 million|
|Competitors||Amazon.com (NAS: AMZN) |
Costco (NAS: COST)
Wal-Mart (NYS: WMT)
Sources: S&P Capital IQ and Motley Fool CAPS.
Just last month, Thentor showed skepticism over the company's online endeavors: "[Barnes & Noble] is stuck in the stone age when it comes to inventory mechanics. I can't see how they'll compete with agile [Amazon], even with Nooks."
Barnes & Noble even sports a negative average two-year return on equity of -5.1%. Meanwhile, rivals Amazon, Costco, and Wal-Mart boast positive average returns on equity of 17.4%, 12.9%, and 23%, respectively.
CAPS member jimpickrell2 elaborates on the bear case:
[Barnes & Noble] is up against the wall. Their brick and mortar business is getting crushed by Amazon. The writing is on the wall, and they've decided to pin their hopes on their online business. ... Amazon is better at it than they are. And even if the online business were to succeed, the rent on those stores will drag them down. ... They may hold out for a while, but will go the way of Tower Records, Borders and other retailers that have been obsoleted by the digital age. Too bad because I like bookstores.
What do you think about Barnes & Noble, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!
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At the time this article was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Fool owns shares of Wal-Mart and Costco. Motley Fool newsletter services have recommended buying shares of Wal-Mart, Amazon, and Costco, as well as creating a diagonal call position in Wal-Mart. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.