Skip to main content

Market Overview

Best Buy Would Be Major Beneficiary Of An hhgregg Liquidation

Share:
Best Buy Would Be Major Beneficiary Of An hhgregg Liquidation

Hhgregg, Inc. (OTC: HGGGQ) has filed a form 8-K stating its plans to commence going-out-of-business sales in the event the company is unable to find a buyer by Friday. Best Buy Co Inc (NYSE: BBY) would be “the major beneficiary of an hhgregg liquidation,” Loop Capital’s Anthony Chukumba said in a report.

While reiterating a Buy rating and a price target of $58 for Best Buy, Chukumba raised the diluted EPS estimate for fiscal 2017 from $3.65 to $3.77, reflecting the sales transfer from closed stores. The analyst added, however, that hhgregg’s liquidation sales could exert pressure on Best Buy’s performance in the first half of 2017.

Best Benefit To Best Buy

A location-by-location analysis of hhgregg's stores indicated that more than 90 percent had a Best Buy “within five miles (and in most cases, within 1–2 miles),” the analyst noted. He added that over 90 percent of hhgregg's product assortment could be found at Best Buy.

“We believe former hhgregg shoppers would be more likely to migrate to Best Buy stores than large format discounters, home improvement chains, or online given the former's more similar store format and customer service levels,” Chukumba commented.

Hhgregg's liquidation would be a positive catalyst for Best Buy’s shares, which are currently trading at a significant discount to its peer group.

Related Links:

Big-Box Earnings Expectations For Best Buy, Target

A Catastrophe For hhgregg's Could Be Catalyst For Best Buy
________
Image Credit: William M at en.wikipedia [CC BY-SA 3.0 (http://creativecommons.org/licenses/by-sa/3.0) or GFDL (http://www.gnu.org/copyleft/fdl.html)], via Wikimedia Commons

Latest Ratings for BBY

DateFirmActionFromTo
Jun 2021Morgan StanleyMaintainsEqual-Weight
May 2021CitigroupMaintainsSell
May 2021Piper SandlerMaintainsOverweight

View More Analyst Ratings for BBY
View the Latest Analyst Ratings

 

Related Articles (BBY + HGGGQ)

View Comments and Join the Discussion!

Posted-In: Anthony Chukumba Loop CapitalAnalyst Color Long Ideas Reiteration Analyst Ratings Trading Ideas Best of Benzinga

Latest Ratings

StockFirmActionPT
WENNorthland Capital MarketsUpgrades30.0
FBMSDA DavidsonDowngrades44.5
PEBEvercore ISI GroupUpgrades
CBAYJonesTradingInitiates Coverage On8.0
WELLEvercore ISI GroupUpgrades86.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
SPAC
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com