Melville House Books

Has Barnes & Noble grown as much as it can? An Associated Press wire story notes that B&N shares “declined slightly in Monday trading after Goldman Sachs cut its rating on the nation’s largest book retailer, citing a recent run-up in stock price.” The report observes that B&N’s stock value “has rallied over the past year, as the company took steps to improve its financial condition, including spinning off video game chain Gamestop and buying back debt and stock.” However, B&N shares are already “at a premium of 34 times its average stock price over the past two years.” Says a Goldman “client note”: “We do not see the kind of earnings growth opportunity that would typically support this kind of premium. At this point, valuation appears extended.”

Dennis Johnson is the founder of MobyLives, and the co-founder and co-publisher of Melville House.