We expect Best Buy Co., Inc. (BBY - Analyst Report) — the specialty retailer of consumer electronics— to beat expectations when it reports third-quarter fiscal 2014 results on Nov 19, 2013.
Why a Likely Positive Surprise?
Our proven model shows that Best Buy is likely to beat earnings because it has the right combination of two key components.
Positive Zacks ESP: Best Buy currently has an Earnings ESP of +9.09%. This is because the Most Accurate estimate stands at 12 cents, while the Zacks Consensus Estimate is pegged at 11 cents.
Zacks Rank #1 (Strong Buy): Note that stocks with a Zacks Ranks of #1, #2 and #3 have a significantly higher chance of beating earnings estimates. The sell-rated stocks (Zacks Rank #4 and #5) should never be considered going into an earnings announcement.
The combination of Best Buy’s Zacks Rank #1 (Strong Buy) and +9.09% ESP makes us very confident regarding a positive earnings beat on Nov 19.
What is Driving the Better-than-Expected Earnings?
Best Buy is undertaking a competitive pricing strategy and making investments in areas such as online, mobile, the multi-channel approach, optimum utilization of floor area and refurbishment of its website (bestbuy.com) functionality. Best Buy also initiated the “buy online - ship from store” endeavor. The company in the last four quarters has outperformed the Zacks Consensus Estimate by an average of 31.4%.
Stocks that Warrant a Look
Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat:
Hanesbrands Inc. (HBI - Analyst Report), Earnings ESP of +1.11% and a Zacks Rank #1 (Strong Buy).
The J. M. Smucker Company (SJM - Analyst Report), Earnings ESP of +0.63% and a Zacks Rank #2 (Buy)
Nordstrom Inc. (JWN - Analyst Report), Earnings ESP of +0.75% and a Zacks Rank #3 (Hold).