Indigo Books & Music Inc. [1], Toronto symbol IDG, is Canada’s largest bookseller. The company operates 97 superstores under the Chapters and Indigo banners. It also has 149 mall-based stores, and sells books, movies and music through its web site.
Indigo is one of the Canadian stock picks we analyze in our Successful Investor [2]newsletter.
In its latest fiscal year, which ended April 2, 2011, the Canadian stock pick’s revenue rose 5.0% to $1.0 billion from $968.9 million in the prior year. Even so, earnings fell 67.5%, to $11.3 million, or $0.45 a share, from $34.9 million, or $1.39 a share.
The drop is due to ongoing investments in its 51.4%-owned Kobo electronic-book (e-book) operations. This business sells e-book downloads and the Kobo e-book reading device. Indigo and its partners recently invested an additional $50 million in Kobo; Indigo’s share was $13 million.
E-book demand is growing quickly. Amazon.com (Nasdaq symbol AMZN) recently announced it is now selling more e-books than paper books. Kobo has attracted 3.6 million users from more than 100 countries in just over 15 months.
We’ve updated our buy/sell/hold advice on Indigo in the latest issue of The Successful Investor. You can this issue, along with 5 in-depth Special Reports and much more at no cost when you take a 1-month FREE trial to The Successful Investor [2] today. Click here to get started right away [3].