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Tale of the Tape

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Why Best Buy (BBY) is Poised to Beat Earnings Estimates Again
December 24, 2013

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Looking for a stock that might be in a good position to beat earnings at its next report? Consider Best Buy Co., Inc. (BBY - Analyst Report), a firm in the retail electronics industry, which could be a great candidate for another beat.

This company has seen a nice streak of beating earnings estimates, especially when looking at the previous two reports. In fact, in these reports, BBY has beaten estimates by at least 60% in both cases, suggesting it has a nice short-term history of crushing expectations.

Earnings in Focus

Two quarters ago, BBY expected to earn 12 cents per share, while it actually produced earnings of 32 cents per share, a beat of 166.7%. Meanwhile, for the most recent quarter, the company looked to deliver earnings of 11 cents a share, when it actually saw earnings of 18 cents per share instead, representing a 63.6% positive surprise.

Thanks in part to this history, recent estimates have been moving higher for Best Buy. In fact, the Earnings ESP for BBY is positive, which is a great sign of a coming beat.

After all, the Zacks Earnings ESP compares the most accurate estimate to the broad consensus, looking to find stocks that have seen big revisions as of late, suggesting that analysts have recently become more bullish on the company’s earnings prospects. This is the case for BBY, as the firm currently has a Zacks Earnings ESP of 1.85%, so another beat could be around the corner.

This is particularly true when you consider that BBY has a great Zacks Rank #2 (Buy), which can be a harbinger of outperformance and a signal for a strong earnings profile. And when you add this solid Zacks Rank to a positive Earnings ESP, a positive earnings surprise happens nearly 70%, so it seems pretty likely that BBY could see another beat at its next report, especially if recent trends are any guide.

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