Full Earnings Preview for Best Buy

Best Buy Co. Inc. (NYSE: BBY) is set to report its earnings on Tuesday before the market opens for trading. These earnings come on the heels of an incredible recovery that the company has made since its fall in January. Still, the company set a very low bar for itself when it reported in May.

Thomson Reuters has consensus earnings estimates of $0.31 in per share and $8.99 billion in revenues. This would compare to the results for the same quarter a year ago of $0.32 earnings per share and $9.3 billion in revenue. Estimates for the coming quarter are $0.23 in earnings per share and $9.13 in revenues.

Best Buy has seen its shares slowly climb back above the $30 mark in recent months, after falling as low as $22.15 in January from $41.00. Since its most recent earnings report in May, Best Buy has seen about a 20% increase in share price.

If investors are looking for support levels after a recent rally, the share price has risen above both the 50-day and 200-day moving averages. The 50-day moving average has risen to $30.21, surpassing the 200-day moving average at $30.14.

Best Buy’s chief accounting office and chief financial officer, Sharon McCollam, warned about declining sales with the May earnings report. The company’s quote was:

As we look forward to the second and third quarters, we are expecting to see ongoing industry-wide sales declines in many of the consumer electronics categories in which we compete. We are also expecting ongoing softness in the mobile phone category as consumers eagerly await highly-anticipated new product launches. Consequently, absent any major product launches, we are expecting comparable sales to be negative in the low-single digits in both the second and third quarters. From an operating income rate perspective, as we outlined last quarter, we are expecting the negative P&L impacts that we have been discussing each quarter – including ongoing investments in price competitiveness, our Renew Blue SG&A investments, and the negative impact of our new credit card agreement — to continue, but to be significantly offset by our Renew Blue cost reductions.

Despite a lower guidance shown in May, Best Buy raised its dividend in June, and its dividend yield is now close to 2.6%. With shares recently trading at $31.26, and a 52-week range of 22.15 to $44.66, the consensus analyst price target is $33.18.

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