Friday, January 6, 2017

Barnes and Noble Stinks...

Barnes and Noble    [BKS]

     Barnes and Noble has cut forecasts because they had a terrible holiday season. The same store sales were considerably lower this holiday season and causing B&N to become reactive and cut its outlook for the fiscal year. In the 9 weeks leading up to the last of the year, B&N reported a decrease in same store sales of 9.1%. This news came out this morning and today along with most other retail stocks taking a big hit as well. Over the last 5 days, the stock is down 8.73% and 5.58% of that is just from today.
Just the day before they went ex-dividend and lowered the price a little bit more. They will send out the money on the first of February but the list of who gets the dividend is now closed. The 15 cent dividend compared to their current share price puts the yield at just under 6%. With the recent decrease in price and ultimately less cash flow, the dividend may edge lower or not be paid at all.

     ALSO, an article was posted on yahoo finance saying the the Barnes and Noble CEO is one of the worst of 2016. They go on to say that Leonard Riggio and his management team have been completely ineffective. From failing hard with the nook to being slow in developing any e-commerce, there isn't much to hang his hat on. An interesting thing to note is that 10% of the 45 million floating shares (outstanding shares - restricted stock) are being shorted. Quite a lot of people have a negative view of the future performance of this company. 

Posted above is the daily chart thanks to which is not a good look. Starting on about December 20th/21st, an obvious downtrend started and is continuing through today. The other three indicators, RSI, MACD, and stochastic, aren't positive. The RSI is sloping downward, showing the majority selling the shares off. The same goes for the MACD. The full stochastic on the bottom isn't as bad as the other two. It's already well below the 30 mark at 14.85 but with the big loss today can continue to fall below that tomorrow. The 50 day moving and exponential are starting to turn down toward the 200 which is another bad sign. If it crosses below the 200, the death cross, typically we'd see a downtrend in the stock. 

     Based on all of that, this stock looks like a must sell, don't buy under any circumstances... But, and there's always a but, the weekly chart and my own hot take. 

Most of this looks similar to the daily chart. RSI is down trending, the MACD and stochastic are doing the same. However, there are a couple of things I really like about this one. First off, I prefer looking at the weekly chart because I like the broader, longer term overview of the technical analysis. Here, you can see that the 50 day moving and exponential are actually turning upward toward the 200 day. Opposite the death cross is the golden cross and that's what we may be seeing soon. The other thing that I like about this is the clear resistance at around $13.00 and the potential support at, let's call it $9.65. As I finish tying this out the morning of January 6th the stock is 5 cents lower than what it closed on the 5th. I believe that if the price of the stock hits anywhere under $10, it becomes a buy opportunity. 

     I wrote about Barnes and Noble in the past and was a fan because of their high dividend yield. The company still believes it will finished with a higher EPS than last year even after the poor holiday season. That's good news for the future dividend. Need money to pay shareholders. So YES, I believe that the support line running around $9.65 represents a really good buy point. As the days and weeks continue I'll keep watching the charts to see what develops. But, under $10 the buyers will come forth. 

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