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ValuEngine Short Pick Book Retailer Barnes and Noble (BKS, $BKS) Suspends Dividend, Down Big

|Includes: BGPIQ, Barnes & Noble Inc (BKS)
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February 23, 2010
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VALUATION WATCH:  Our models find that overvaluation is approaching levels typically seen when a market correction is imminent. Overvalued stocks now make up almost 64% of our universe and 31% of the universe is calculated to be overvalued by 20% or more.  15 of 16 sectors are now calculated to be overvalued.

Book Him Dano

Short Pick Book Retailer Barnes and Noble (BKS, $BKS) Suspends Dividend, Down Big

 Barnes & Noble, Inc. is engaged in the retail 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, off-price bargain books and magazines. These collectively account for substantially all of the company's bookstore sales. Bestsellers represent only a small portion of the Barnes & Noble, Inc. store sales.

  Our Forecast Model selected Barnes & Noble, Inc. as a short-side pick last week when we re-balanced our VE Forecast 16 Market Neutral Portfolio Newsletter.  This seemed contrarian at the time as bad news for Borders was being touted as a plus for Barnes & Noble, Inc..  The retailer was looking to scoop up Borders locations and garner market share from the demise of its large brick and mortar rival.  However, the stock has not faired well over the past few days and is currently is down more than 20% since last Thursday's newsletter re-balance.  Company officials announced the suspension of the stock's $0.25/share dividend yesterday and so far today the ticker is down more than 9%.  Once more our Forecast Model is proving adept at stock picking under volatile market conditions.

 ValuEngine has issued a HOLD recommendation for Barnes & Noble, Inc. on Feb. 23, 2011. Based on the information we have gathered and our resulting research, we feel that Barnes & Noble, Inc. has the probability to ROUGHLY MATCH average market performance for the next year. The company exhibits ATTRACTIVE price/sales ratio and expected EPS growth, but UNATTRACTIVE market valuation and momentum.

 Based on available data as of Feb. 23, 2011, we believe that BKS should be trading at $6.7. This makes BKS 138.01% overvalued. Fair Value indicates what we believe the stock should be trading at today if the stock market were perfectly efficient and everything traded at its true worth. For BKS, we base this on actual earnings per share (NYSEARCA:EPS) for the previous four quarters of -$1.11, forecasted EPS for the next four quarters of -$0.26, and correlations to the 30- year Treasury bond yield of 4.61%.

Subscribers can check out the latest figures on Barnes & Noble, Inc. from our models HERE. 

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Market Indices Data
1:33PM EST Latest Change YTD
Dow Jones
12,086.50 -126.24 4.40%
NASDAQ Composite
2,711.58 -44.84 2.21%
Russell 2000
795.75 -17.21 1.54%
S&P 500
1,302.55 -12.89 3.57%

 

ValuEngine Market Overview
Summary of VE Stock Universe
Stocks Undervalued
36.1%
Stocks Overvalued
63.9%
Stocks Undervalued by 20%
15.51%
Stocks Overvalued by 20%
31.17%

 

ValuEngine Sector Overview
Sector Change MTD YTD Valuation Last 12-MReturn P/E Ratio
Oils-Energy -1.79% 1.87% 7.82% 28.99% overvalued 46.39% 42.98
Basic Materials -3.22% -0.57% -2.42% 17.13% overvalued 62.86% 35.12
Multi-Sector Conglomerates -3.22% -1.48% 2.67% 14.92% overvalued 34.94% 29.22
Transportation -3.43% -1.33% -1.94% 14.66% overvalued 31.04% 26.90
Business Services -2.41% 1.07% 2.16% 14.55% overvalued 21.64% 38.17
Computer and Technology -3.10% 4.49% 9.19% 13.49% overvalued 40.28% 39.33
Aerospace -2.22% -1.06% 3.32% 12.91% overvalued 32.26% 18.87
Industrial Products -2.76% 1.03% 3.98% 11.17% overvalued 31.11% 28.70
Retail-Wholesale -2.36% 3.61% 1.98% 10.21% overvalued 30.43% 28.27
Auto-Tires-Trucks -3.53% -2.54% -2.30% 9.92% overvalued 47.42% 22.49
Finance -2.19% 1.81% 3.68% 9.65% overvalued 18.50% 24.87
Consumer Staples -2.08% -0.15% -0.76% 9.35% overvalued 18.57% 27.32
Construction -4.15% -1.88% 1.94% 9.29% overvalued 14.43% 45.59
Consumer Discretionary -2.22% 2.97% 3.79% 8.60% overvalued 27.56% 30.34
Utilities -1.27% -0.13% 1.17% 7.63% overvalued 17.46% 26.33
Medical -1.79% 2.11% 7.32% 0.09% undervalued 18.39% 44.65

 

 

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AMR Corp (NASDAQ:AMR) Up 33%

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