A poll on TheStreet.com recently rated Barnes & Noble as the retailer most likely to fail. The process started with an analysis of large retailers using Altman Z-Scores based on the company’s financials and purporting to measure the probability of going bankrupt within two years. The site looked at twenty retailers with scores below three, the level above which a store is considered safe. Companies with scores below 1.8 are considered distressed, and scores between 1.8 and 3 are in a gray area. Barnes & Noble fell into the gray area, according to the report; the company’s score worsened from 2.66 in 2009 to 2.11 in 2010. 
 
The Street then polled its readers on five of those retailers: American Apparel, Barnes & Noble, Rite Aid, Zale and Supervalu, and Barnes & Noble got the most votes as most likely to go bankrupt. 
 
Voters were undoubtedly influenced by the bankruptcies of two packaged media retailers in recent months. Borders is struggling to exit from Chapter 11 bankruptcy (see “Borders Drowning in a Sea of Red Ink”), and Blockbuster is being dismembered by its new owner Dish (see “Another 1000 Blockbusters to Close”). 
 
But TheStreet readers may be underestimating Barnes & Noble, which has a fairly strong balance sheet. Stock in the company went up 13% on Friday after its announcement that it would be launching a new e-reader later this month, and Janney Capital Markets initiated coverage with a buy rating.