Barnes & Noble, Inc. (BKS)
- 16.53 (USD)
(+2.7 %)
9/3/2010 11:24:00 AM
BKS Stock Report
NYSE:
BKS
16.53
(USD)
(2.7 %
)
09/03 11:24 AM
Open
16.49
Day's Range
16.28
-
16.87
52Wk Range
12.32 - 25.07
Mkt Cap
915.8 Million
Vol/Avg
283961/774,447
Div/Yield
6.43%
Key Fundamentals
| Price (11:24 AM) | 16.53 |
|---|---|
| Volume (11:24 AM) | 283961 |
| Last Close Price | 16.53 |
| 10 Day Average Volume | 774,447 |
| 13 Week Price Range | 12.32 - 20.23 |
| 52 Week Price Range | 12.32 - 25.07 |
| LTM Revenue | 5.8 Billion |
| Shares Outstanding (4/30/2010) | 58.9 Million |
| Market Capitalization | 915.8 Million |
| Shares Held By Institutions | 13.0 Million |
| Institutional Holders | 211 |
| % Shares Held By Institutions | 72.12% |
| Earnings Per Share (EPS) | 0.64 |
| P/E Ratio | 24.6914 |
| Book Value Per Share | 14.0783 |
| Gross Margin | 28.86% |
| Annual Dividend | 1 |
| Dividend Yield | 6.43% |
| Beta | 1.38624 |
| Fiscal Year Ends | April |
About Barnes & Noble, Inc.
Barnes & Noble, Inc.is considered to operate in the Consumer Services sector. They specifically operate in the Specialty Retail, Other business segment contained within the Retail - Specialty industry.
Barnes & Noble, Inc. was incorporated in Delaware in 1986. The Company operates as a bookseller. The Company's main business is the sale of trade books (generally hardcover and paperback consumer titles, excluding educational textbooks and specialized religious titles), mass market paperbacks (such as mystery, romance, science fiction and other popular fiction), children's books, bargain books, magazines, gift, café products and services, music and movies direct to customers. It conducts the online part of its business through barnesandnoble.com llc (Barnes & Noble.com). The Company's subsidiary Sterling Publishing is a publisher of non-fiction trade titles, with more than 5,000 books in print. Founded in 1949, Sterling publishes a range of non-fiction and illustrated books, consisting mainly of subjects such as crafts, food and wine, mind/ body/spirit, photography, puzzles and games, current affairs and children's books. Sterling also publishes books for a number of brands, including many of the Hearst magazines such as Good Housekeeping and Cosmopolitan, Hasbro, The American Museum of Natural History, and AARP. Sterling's mission is to publish high-quality books that educate, entertain, and enrich the lives of its readers. Among its best-selling titles are Paul McKenna's I Can Make You Thin, the Windows on the World Complete Wine Course from renowned wine expert Kevin Zraly, Peter Yarrow and Lenny Lipton's Puff, the Magic Dragon, Charles Darwin's On the Origin of the Species: The Illustrated Edition (Edited by David Quammen), and Cosmopolitan's The Cosmo Kama Sutra. With over 40 years of bookselling experience, management has a strong sense of customers' changing needs and the Company leads book retailing with a 'community store' concept. Barnes & Noble's typical store offers a comprehensive title base, a café, a children's section, a music/DVD department, a magazine section and a calendar of ongoing events, including author appearances and children's activities, which make each Barnes & Noble store an active part of its community. The Company's store features an authoritative selection of books, ranging from 60,000 to 200,000 titles. The Company continues to develop and introduce new product line extensions, such as proprietary gifts, and Barnes & Noble @ School, providing education tools for teachers, librarians and parents. These offerings and services have helped to make many of the stores neighborhood institutions. The Company's DVD selection is focused on foreign films, documentaries and episodic TV shows. The book business is highly competitive in every channel in which Barnes & Noble competes. The Company competes with bookstores including Borders Group, Inc. (Borders) and Books-A-Million and smaller format bookstores such as Waldenbooks. B. Dalton Bookseller, Sterling Publishing, Lark Books, Quamut and SparkNotes are some Company-owned servicemarks registered with the United States Patent and Trademark Office.
Ockham's Rating/Recommendation Summary
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BKS Revenue
Cash earnings is the most important factor in our analysis, but it goes without saying that if a company cannot produce sales then there is no ability to generate cash flow. By that logic we look very closely at revenue numbers as our second most important factor in valuing a company's stock. We have established reasonable Price to Sales per share ranges based on historical data of the last 10 years. For, BKS the high and low end of the Price to Sales per share ratios are 0.47x and 0.26x respectively.
Notice that BKS's current Price to Sales per share ratio is 0.13x, which is quite a bit below what we consider a normal Price to Sales ratio for this stock. Given normal conditions and a price of 13.03, BKS is 64% below where we would expect to see it. This will beneficially factor into our final analysis of BKS as it is not often that this stock sinks to these levels.
BKS Cash Earnings
Looking at BKS specifically in their Cash Earnings capabilities, Ockham views BKS as significantly above their historical average multiples of Cash Earnings, as calculated by our proprietary analysis. It is incredibly important to understand that for BKS, the current level of Cash Earnings compared to its historical levels helps identify where BKS is in relation to what the investing community was willing to pay for this level of Cash Earnings in the past. With a historical high Cash Earnings per share ratio of 19.88 and a historical low Cash Earnings per share ratio of 10.88, an investor can relate where value becomes optimal.
So what does this tell us about BKS in particular? Basically, we would value the current level of Cash Earnings per share (which is at 20.93) as significantly overvalued. Just by looking at the last closing price of BKS, which was 13.03, we can see that compared to the historical high Price to Cash Earnings levels we calculated, the market has already rewarded BKS with a higher stock price. So basically, we don't view this level of Cash Earnings or stock price as compatible with a long term value at this point. Just remember, that does not mean that BKS may not have other merits with which to find a good investment opportunity, it just means that we would prefer to see either an increase in Cash Earnings or a decrease in stock price before we would become bullish on this metric.
BKS Dividends
While it is not necessary to pay an attractive dividend or a dividend at all, to receive a positive rating from Ockham, we view dividends as an additionally helpful measure in determining the future potential of any company.
In BKS’s case, the estimated annual dividend is 1.00 resulting in a current dividend yield of 7.67%. Similar to our review of Sales and Cash Earnings per share, we evaluate dividend yields from BKS against the historic high and low levels over the past 10 years. The highest dividend yield from BKS over this period was 8.36% while the lowest dividend yield was 0.00% It's hard not to notice that BKS pays a current dividend yield that is 83.68% above the historical median. This peaks our interest since our analysis looks favorably upon dividend yields that are greater than the historical median.