With its stock price falling, Books-a-Million (NASDAQ: BAMM
) is expanding rapidly to fill the void left by the bankruptcy of Borders and the travails of Barnes & Nobles (NYSE: BKS
), as the entire industry suffers from competition from Amazan (NASDAQ: AMZN
). Barnes & Nobles (BKS) has been analyzed in previous articles
Its stock price has certainly not been expanding along with the company. Books-A-Million is off for the week, month, quarter and year. For 2011, Books-a-Million has fallen by more than 60%.
As to be expected, this has resulted in very low valuations on the balance sheet. The price-to-sales ratio is just 0.08. The price-to-book ratio is 0.31.
Now, Books-A-Million (BAMM) is not a start-up with a wild-eyed scheme to revolutionize bookstores. Books-A-Millon has been around since 1917. It has 251 stores in 30 states and the District of Columbia. In 2007, it was trading at well over $20 a share. Such is what The Great Recession and competition from Amazon (AMZN) will do.
In late October, Books-A-Million announced that it was opening 41 new stores. In the statement, the closing of 21 underperforming stores was announcement. “Our expansion into these markets represents a substantial opportunity for our Company,” said Terrance G. Finley, President and Chief Operating Officer for Books-A-Million, Inc. “We have been working diligently in the last several months to find ways to keep a number of former Borders store locations in operation under the BAM! brand, and these store openings are the culmination of that work. These 41 stores will also benefit local economies by providing and sustaining jobs in and around our new locations. To BAM!, it’s about forging a lifetime partnership with all bookstore lovers.”
This expansion has not been cheap and the financials are not pretty. Books-A-Million reported a $4 million loss for the third quarter of 2011. The profit margin is about negative 1%. The operating margin is a negative Quarterly revenue growth is around a negative 1%, too. Returns on assets and returns on equity are negative too. Levered free cash flow is negative, too. The short float is very high at over 16%. Barnes & Noble (BKS) is losing money, too, with a negative 1.20 price-to-earnings ratio.
Now around $2.20 a share, the book value of Books-A-Million is $6.78. The dividend is over 9%, though that certainly appears to be on shaky ground with all the other demands on the cash flow. Insiders own over half the shares with a recent buy. The relative strength index rating for Books-A-Million is 42, with 30 the standard for a stock considered to be oversold.