Why Best Buy’s Earnings Beat Wasn’t Good Enough

August 28, 2018 by Chris Lange

Best Buy Co. Inc. (NYSE: BBY) released its fiscal second-quarter financial results early on Tuesday. The big-box retailer said that it had $0.91 in earnings per share (EPS) and $9.38 billion in revenue, which compares with consensus estimates of $0.83 in EPS on revenue of $9.28 billion. The same period of last year reportedly had EPS of $0.69 and $8.94 billion in revenue.

During the most recent quarter, enterprise comparable sales grew 6.2%, compared to an increase of 5.4% in the same period last year. This consisted of domestic comparable sales of 6.0% and international comparable sales of 7.6%.

In terms of its segments, the company reported the following:

  • Domestic revenues increased 4.4% year over year to $8.64 billion.
  • International revenues increased 10.8% to $740 million.

Despite posting strong results for this quarter, there were some issues with guidance. Looking ahead to the fiscal third quarter, the company expects to see EPS in the range of $0.79 to $0.84 and enterprise revenue between $9.4 billion and $9.5 billion, with enterprise comparable sales of 2.5% to 3.5%. Consensus estimates call for $0.92 in EPS and $9.49 billion in revenue.

For the full year, Best Buy is guiding EPS in the range of $4.95 to $5.10, up from the previous range of $4.80 to $5.00. This is also in line with what analysts are forecasting.

It’s worth pointing out that this stock has risen about 12% from the most recent earnings report when it was a $68 stock at the end of May.

Hubert Joly, Best Buy’s board chair and chief executive, commented:

We are happy to report strong top- and bottom-line results for the second quarter that exceeded our expectations. Our comparable sales growth was helped by the favorable environment in which we operate and driven by how customers are responding to the unique and elevated experience we are building. We are particularly encouraged with the continued progress of our Net Promoter Scores and our continued market share gains. We are excited about the progress we are making on the implementation of our Best Buy 2020 strategy and the opportunities in front of us.

Shares of Best Buy closed Monday at $81.66, with a consensus analyst price target of $77.85 and a 52-week range of $51.61 to $84.37. Following the announcement, the stock was down about 4% at $78.09 in early trading indications Tuesday.

Sponsored: Want to Retire Early? Here’s a Great First Step

Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances?

Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free.

Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.