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Best Buy (BBY) Stock Surges on Q1 Earnings & Revenue Beat
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Best Buy Company, Inc. (BBY - Free Report) reported better-than-expected earnings for the eighteenth-consecutive quarter as the company reported first-quarter fiscal 2018 results. The company posted adjusted earnings per share of 60 cents that comfortably surpassed the Zacks Consensus Estimate of 40 cents. Moreover, earnings also increased 40% year over year, which came as a big surprise to the investors.
Including one-time items, quarterly earnings per share came in at 60 cents compared with 69 cents in the year-ago quarter.
Moreover, the company impressed investors on the revenues front by beating the Zacks Consensus Estimate after missing the same in the preceding quarter. The company’s revenues increased 1% to $8,528 million and surpassed the Zacks Consensus Estimate of $8,264 million. Enterprise comparable-store sales (comps) were up 1.6%, compared with a decline of 0.1% in the prior-year period. The company’s results were driven by growth in both domestic and international sales. Robust performance of gaming and mobile also drove the results higher.
Adjusted operating profit came in at $300 million, up 25% year over year. While adjusted operating margin was 3.5%, in comparison with 2.8% in the prior-year quarter.
Following the results, the company’s shares jumped over 14%. In fact, in the past one year the stock has surged 57.7%, outperforming the Zacks categorized Retail-Consumer Electronic industry’s gain of 38.8%.
Segment Details
Domestic segment revenues gained 1.1% year over year to $7,912 million, primarily owing to 1.4% increase in comparable sales, partially offset by loss of revenues from 12 large-format as well as 40 Best Buy Mobile store shut downs.
Domestic comparable-online sales increased 22.5 % to $1.02 billion. The upside was driven by improved traffic and conversion rates.
The segment’s adjusted gross profit increased 3.8% to $1,871 million during the quarter. Adjusted margin came in at 23.6% compared with 23% in the prior-year quarter on the back of better margin rates particularly in the appliances as well as home theater categories. Adjusted operating income jumped 25.2% to $298 million while adjusted margin expanded 80 basis points (bps) to 3.8%.
International segment revenues rose 0.3% to $616 million, primarily on the back of 4% rise in comparable sales growth both in Canada and Mexico.
The segment’s adjusted gross profit fell 5% to $151 million in the quarter and gross margin contracted 140 bps to 24.5%. Adjusted operating profit came in at $2, flat year over year. Adjusted operating income margin came in at 0.3%, which is also flat year on year.
Other Financial Details
Best Buy ended the quarter with cash and cash equivalents of $1,651 million, long-term debt of $1,302 million and total equity of $4,499 million.
On Mar 1, 2017, the board of directors announced a plan to repurchase shares worth $3 billion over the next two years. In the fiscal first quarter, the company repurchased 8.1 million shares for $373 million.
Best Buy Co., Inc. Price, Consensus and EPS Surprise
For the fiscal 2018, management forecasts Enterprise revenues (including 53rd week) growth of 2.5%, up from the prior guidance of 1.5%. On a 52-week basis, the company anticipates adjusted operating income growth rate in the range of 1.5–5.5%. On the 52-week basis, it expects enterprise revenues to be up 1%, compared with flat year over year guided earlier.
For second-quarter fiscal 2018, management anticipates Enterprise revenues between $8.6 billion and $8.7 billion, and comparable sales increase of 1.5–2.5%. Management also projects earnings in the range of 57–62 cents a share. The current Zacks Consensus Estimate for the second quarter is pegged at 40 cents, which could witness upward revisions in the coming days.
Also in the fiscal second quarter, the company expects domestic comparable sales to rise in the range of 1.5–2.5%, while international comparable sales are projected to be in the range of flat to up 3.0%. Enterprise comparable sales are projected to be in the range of 1.5–2.5%.
Gildan Activewear, with long-term earnings per share growth rate of 12.3%, has delivered positive earnings surprise in the last two quarters.
Burlington Stores delivered an average positive earnings surprise of 26.3% in the trailing four quarters and has a long-term earnings growth rate of 15.9%.
Ulta Beauty Stores delivered an average positive earnings surprise of 5.7% in the preceding four quarters and has a long-term earnings growth rate of 19.5%.
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Best Buy (BBY) Stock Surges on Q1 Earnings & Revenue Beat
Best Buy Company, Inc. (BBY - Free Report) reported better-than-expected earnings for the eighteenth-consecutive quarter as the company reported first-quarter fiscal 2018 results. The company posted adjusted earnings per share of 60 cents that comfortably surpassed the Zacks Consensus Estimate of 40 cents. Moreover, earnings also increased 40% year over year, which came as a big surprise to the investors.
Including one-time items, quarterly earnings per share came in at 60 cents compared with 69 cents in the year-ago quarter.
Moreover, the company impressed investors on the revenues front by beating the Zacks Consensus Estimate after missing the same in the preceding quarter. The company’s revenues increased 1% to $8,528 million and surpassed the Zacks Consensus Estimate of $8,264 million. Enterprise comparable-store sales (comps) were up 1.6%, compared with a decline of 0.1% in the prior-year period. The company’s results were driven by growth in both domestic and international sales. Robust performance of gaming and mobile also drove the results higher.
Adjusted operating profit came in at $300 million, up 25% year over year. While adjusted operating margin was 3.5%, in comparison with 2.8% in the prior-year quarter.
Following the results, the company’s shares jumped over 14%. In fact, in the past one year the stock has surged 57.7%, outperforming the Zacks categorized Retail-Consumer Electronic industry’s gain of 38.8%.
Segment Details
Domestic segment revenues gained 1.1% year over year to $7,912 million, primarily owing to 1.4% increase in comparable sales, partially offset by loss of revenues from 12 large-format as well as 40 Best Buy Mobile store shut downs.
Domestic comparable-online sales increased 22.5 % to $1.02 billion. The upside was driven by improved traffic and conversion rates.
The segment’s adjusted gross profit increased 3.8% to $1,871 million during the quarter. Adjusted margin came in at 23.6% compared with 23% in the prior-year quarter on the back of better margin rates particularly in the appliances as well as home theater categories. Adjusted operating income jumped 25.2% to $298 million while adjusted margin expanded 80 basis points (bps) to 3.8%.
International segment revenues rose 0.3% to $616 million, primarily on the back of 4% rise in comparable sales growth both in Canada and Mexico.
The segment’s adjusted gross profit fell 5% to $151 million in the quarter and gross margin contracted 140 bps to 24.5%. Adjusted operating profit came in at $2, flat year over year. Adjusted operating income margin came in at 0.3%, which is also flat year on year.
Other Financial Details
Best Buy ended the quarter with cash and cash equivalents of $1,651 million, long-term debt of $1,302 million and total equity of $4,499 million.
On Mar 1, 2017, the board of directors announced a plan to repurchase shares worth $3 billion over the next two years. In the fiscal first quarter, the company repurchased 8.1 million shares for $373 million.
Best Buy Co., Inc. Price, Consensus and EPS Surprise
Best Buy Co., Inc. Price, Consensus and EPS Surprise | Best Buy Co., Inc. Quote
Guidance
For the fiscal 2018, management forecasts Enterprise revenues (including 53rd week) growth of 2.5%, up from the prior guidance of 1.5%. On a 52-week basis, the company anticipates adjusted operating income growth rate in the range of 1.5–5.5%. On the 52-week basis, it expects enterprise revenues to be up 1%, compared with flat year over year guided earlier.
For second-quarter fiscal 2018, management anticipates Enterprise revenues between $8.6 billion and $8.7 billion, and comparable sales increase of 1.5–2.5%. Management also projects earnings in the range of 57–62 cents a share. The current Zacks Consensus Estimate for the second quarter is pegged at 40 cents, which could witness upward revisions in the coming days.
Also in the fiscal second quarter, the company expects domestic comparable sales to rise in the range of 1.5–2.5%, while international comparable sales are projected to be in the range of flat to up 3.0%. Enterprise comparable sales are projected to be in the range of 1.5–2.5%.
Zacks Rank & Other Key Picks
Best Buy currently carries a Zacks Rank #2 (Buy). Other top ranked stock which warrant a look in the sector include Gildan Activewear Inc. (GIL - Free Report) , Burlington Stores, Inc. (BURL - Free Report) and Ulta Beauty, Inc. (ULTA - Free Report) , all three of them carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Gildan Activewear, with long-term earnings per share growth rate of 12.3%, has delivered positive earnings surprise in the last two quarters.
Burlington Stores delivered an average positive earnings surprise of 26.3% in the trailing four quarters and has a long-term earnings growth rate of 15.9%.
Ulta Beauty Stores delivered an average positive earnings surprise of 5.7% in the preceding four quarters and has a long-term earnings growth rate of 19.5%.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look. See the pot trades we're targeting>>