Earnings Previews: Bed Bath & Beyond, CarMax, Rite Aid

The three major U.S. equity indexes closed lower again Monday. The Dow Jones industrials ended the day down 1.11%, the S&P 500 closed lower by 1.03%,and the S&P 500 retreated 0.6%. Ten of 11 sectors closed lower, shown the way by real estate (down by 2.63%) and energy (down 2.57%). Consumer staples, the day’s only gainer, closed up 0.01%.

Economic news due Tuesday includes the Conference Board’s confidence index (expected to rise from 103.2 in August to 1.04.7) and the Census Bureau’s report on new home sales (expected to be roughly flat with August’s reported total of 511,000). All three major indexes traded higher early Tuesday.

Before U.S. markets opened on Tuesday, United Natural Foods reported that earnings per share (EPS) came in a penny better than expected but that revenue missed the consensus estimate. The food wholesaler also issued in-line guidance. Shares traded up about 2.4%.

Jabil soundly beat consensus estimates on both the top and bottom lines and issued guidance in line with expectations. The stock traded up about 4.2% shortly after the opening bell.

Here is a look at three companies reporting quarterly results before U.S. markets open on Thursday.

Bed Bath & Beyond

Before GameStop chair and activist investor Ryan Cohen sold his nearly 12% stake in mid-August, shares of Bed Bath & Beyond Inc. (NASDAQ: BBBY) had soared by a factor of nearly six since the beginning of the month. Retail investors (read: Apes) had piled into the stock and, just as quickly, exited on news that Cohen had sold.

Before his sale, Cohen did get the company’s board to replace the CEO and add three new members. The new management quickly announced a turnaround plan that included closing 150 stores and firing 20% of its staff. The stock price has continued to sink, however. Investors are not convinced that those steps are going to shake things up much.

Analysts are skeptical. Of 17 brokerages covering the stock, 12 have a Sell or Strong Sell rating, while five rate the shares at Hold. At a recent price of around $6.40 apiece, the shares trade at nearly double their median price target. At the high price target of $9.00, the upside potential is 40.6%.

Bed Bath & Beyond is expected to post fiscal second-quarter revenue of $1.45 billion, which would be down 1.2% sequentially and by 26.8% year over year. Analysts expect a loss per share of $1.80, compared with a per-share loss of $2.83 in the prior quarter and EPS of $0.04 in the year-ago quarter. For the full 2023 fiscal year ending in February, estimates call for a loss per share of $6.90, compared to a loss per share of $1.08 last year. Revenue is expected to fall by 22.3% to $6.11 billion for the fiscal year.

Bed Bath & Beyond is not expected to post a profit in 2023, 2024 or 2025. The enterprise value to sales multiple for each of the years is 0.6. The stock’s 52-week trading range is $4.38 to $30.06, and the company does not pay a dividend. Total shareholder return over the past 12 months was negative 72.2%.

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