I've been following retailer Best Buy (BBY) for several years.  I always liked the logo, the store and their clean aggressive business model.

But I'm surprised that the stock has even held up as well as it has given the market declines.  A year ago, earnings expectations were more than $4 and now the current year's guidance is at $2.60 with the next fiscal year being a question mark.  Best Buy is talking about significant cost reductions next year and their balance sheet has deteriorated, despite promising a slightly higher dividend of .14

Cash and investments are at about 600M while long term debt and liabilities are at 2.1 billion.  Short term debt is another 2.1 billion.  A year ago, those numbers were very different.  To make the long story short, their balance sheet has gone from good to bad and rating agencies have downgraded their debt ratings.

So with the holiday quarter dropping 80% year over year based on their guidance in mid December, if we apply that kind of performance to the next fiscal year we get 80% of $2.60 is $2.08.  Analysts expect $2.32 (90 days ago they expected $3.52).

It's difficult to compare Best Buy to other companies since so many direct competitors are not making any money.

But the bottom line is if we consider the stock price ($29) plus all the debt ($10) divided by the earnings estimate of $2.32 - that leaves an earnings multiple of 16.8

16.8 in this market seems rather high, and Best Buy employees I've talked to are telling me this year's holiday was significantly weaker than last year.

I think Best Buy's lack of FY10 guidance says that analyst expectations are likely too high.  I think Best Buy is a good company, but it will be hard to hold these valuations.  I don't believe it is a "Strong Sell."  But I believe it is a "Hold" at best right now.