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Higher Revenues & Savings to Aid Best Buy's (BBY) Q3 Earnings
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Best Buy Co. Inc (BBY - Free Report) is slated to report third-quarter fiscal 2019 results on Nov 20. In the trailing four quarters, earnings of this retailer of technology products, services and solutions has outperformed the Zacks Consensus Estimate by an average of 8.9%. In the last reported quarter, the company delivered a positive earnings surprise of 9.6%.
Let’s delve deeper and take a look at the factors that will be influencing the results.
Which Way are Estimates Treading?
Notably, the top and the bottom line have been rising year on year for a while. After registering a bottom-line rally of 31.9% in the second quarter of fiscal 2019, the company is likely to witness year-over-year improvement of roughly 9% in the third quarter. The Zacks Consensus Estimate for third-quarter earnings is pegged at 85 cents, reflecting a rise from 78 cents delivered in the year-ago quarter. The estimate has been stable in the past 30 days.
Further, the consensus mark for revenues for the impending quarter is currently pegged at $9,543 million, up 2.4% from the year-ago quarter’s level.
Best Buy Co., Inc. Price, Consensus and EPS Surprise
Best Buy is leaving no stone unturned to attract greater footfall in stores and attain incremental revenues. The company has been undertaking extensive investments to upgrade operations, primarily focusing on developing omni-channel capabilities. Moreover, the company banks on store-in-a-store concept to reach target groups and also reap benefits from the display of different brands under one roof. In fact, the company is concentrating on enhancing mobile phone category in its big-box stores as well as online, under the Mobile 2020 strategy.
Speaking of strategies, the company has been progressing well with the ‘Best Buy 2020: Building the New Blue’ plan. Under this strategy, the top-most priority is exploring and pursuing growth opportunities, better execution in key areas, cost optimization and investing in people as well as systems to drive growth, implementation and efficiencies. Progressing along these lines, the company is focusing on accelerating growth in Canada and Mexico. Further, management targets $600 million of cost reduction and gross profit optimization by 2021. In fact, management expects that such efforts will cushion the adverse impacts from higher costs and the rollout of Total Tech Support in the upcoming quarterly release.
Apart from these, the company also focuses on strengthening partnership with vendors. Further, it continues to invest in areas such as appliances, In-Home Advisor, health space as evident from the acquisition of GreatCall, smart home and Total Tech Support. In fact, during the second quarter, the company became the brick-and-mortar partner for new line of smart TVs equipped with Amazon's Fire TV that offers streaming and subscription services for the web series and movies.
The aforementioned growth endeavors are likely to continue boosting the performance of this renowned electronics retailer. Moreover, management’s encouraging view for the third quarter boosts our optimism. Notably, management estimates Enterprise revenues in the range of $9.4-$9.5 billion and comparable sales increase of 2.5-3.5%. Adjusted earnings are anticipated in the band of 79-84 cents a share, reflecting an increase of 1-8% year over year. Additionally, domestic comparable sales growth is projected between 2.5% and 3.5% and international comparable sales growth is estimated between 2% and 4%.
What does the Zacks Model Predict?
Our proven model doesn’t show that Best Buy can beat bottom-line estimates this quarter. For this to happen, a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are a few companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat:
Kohl's Corporation (KSS - Free Report) has an Earnings ESP of +0.23% and a Zacks Rank #2.
The TJX Companies, Inc (TJX - Free Report) has an Earnings ESP of +0.89% and a Zacks Rank #3.
Zumiez Inc. (ZUMZ - Free Report) has an Earnings ESP of +0.62% and a Zacks Rank #3.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Higher Revenues & Savings to Aid Best Buy's (BBY) Q3 Earnings
Best Buy Co. Inc (BBY - Free Report) is slated to report third-quarter fiscal 2019 results on Nov 20. In the trailing four quarters, earnings of this retailer of technology products, services and solutions has outperformed the Zacks Consensus Estimate by an average of 8.9%. In the last reported quarter, the company delivered a positive earnings surprise of 9.6%.
Let’s delve deeper and take a look at the factors that will be influencing the results.
Which Way are Estimates Treading?
Notably, the top and the bottom line have been rising year on year for a while. After registering a bottom-line rally of 31.9% in the second quarter of fiscal 2019, the company is likely to witness year-over-year improvement of roughly 9% in the third quarter. The Zacks Consensus Estimate for third-quarter earnings is pegged at 85 cents, reflecting a rise from 78 cents delivered in the year-ago quarter. The estimate has been stable in the past 30 days.
Further, the consensus mark for revenues for the impending quarter is currently pegged at $9,543 million, up 2.4% from the year-ago quarter’s level.
Best Buy Co., Inc. Price, Consensus and EPS Surprise
Best Buy Co., Inc. Price, Consensus and EPS Surprise | Best Buy Co., Inc. Quote
Factors Likely to Impact Results
Best Buy is leaving no stone unturned to attract greater footfall in stores and attain incremental revenues. The company has been undertaking extensive investments to upgrade operations, primarily focusing on developing omni-channel capabilities. Moreover, the company banks on store-in-a-store concept to reach target groups and also reap benefits from the display of different brands under one roof. In fact, the company is concentrating on enhancing mobile phone category in its big-box stores as well as online, under the Mobile 2020 strategy.
Speaking of strategies, the company has been progressing well with the ‘Best Buy 2020: Building the New Blue’ plan. Under this strategy, the top-most priority is exploring and pursuing growth opportunities, better execution in key areas, cost optimization and investing in people as well as systems to drive growth, implementation and efficiencies. Progressing along these lines, the company is focusing on accelerating growth in Canada and Mexico. Further, management targets $600 million of cost reduction and gross profit optimization by 2021. In fact, management expects that such efforts will cushion the adverse impacts from higher costs and the rollout of Total Tech Support in the upcoming quarterly release.
Apart from these, the company also focuses on strengthening partnership with vendors. Further, it continues to invest in areas such as appliances, In-Home Advisor, health space as evident from the acquisition of GreatCall, smart home and Total Tech Support. In fact, during the second quarter, the company became the brick-and-mortar partner for new line of smart TVs equipped with Amazon's Fire TV that offers streaming and subscription services for the web series and movies.
The aforementioned growth endeavors are likely to continue boosting the performance of this renowned electronics retailer. Moreover, management’s encouraging view for the third quarter boosts our optimism. Notably, management estimates Enterprise revenues in the range of $9.4-$9.5 billion and comparable sales increase of 2.5-3.5%. Adjusted earnings are anticipated in the band of 79-84 cents a share, reflecting an increase of 1-8% year over year. Additionally, domestic comparable sales growth is projected between 2.5% and 3.5% and international comparable sales growth is estimated between 2% and 4%.
What does the Zacks Model Predict?
Our proven model doesn’t show that Best Buy can beat bottom-line estimates this quarter. For this to happen, a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Although Best Buy currently carries a Zacks Rank #2, its Earnings ESP of 0.00% reduces chances of an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks Poised to Beat Earnings Estimates
Here are a few companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat:
Kohl's Corporation (KSS - Free Report) has an Earnings ESP of +0.23% and a Zacks Rank #2.
The TJX Companies, Inc (TJX - Free Report) has an Earnings ESP of +0.89% and a Zacks Rank #3.
Zumiez Inc. (ZUMZ - Free Report) has an Earnings ESP of +0.62% and a Zacks Rank #3.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>