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Bull of the Day: Best Buy (BBY)

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Headquartered in Richfield, MN, Best Buy (BBY - Free Report) is a leading specialty retailer of technology products, services and solutions, with approximately 1,600 stores in North America. Domestic Operations accounted for 92% of FY17 total revenue.

According to the company, 70% of the U.S. population lives within 15 minutes of a Best Buy store. That has helped the retailer to improve its e-commerce operations as shoppers can purchase online and pick up from a nearby Best Buy store, within two days in most cases.

Strong Results and Upgraded Guidance

The retailer reported adjusted earnings of $2.42 per share, up 25% year over year and ahead of the Zacks Consensus Estimate of $2.05.

Revenues were up 14% year-over-year and also beat our estimate.

 “We are excited to report strong results for the fourth quarter and the year,” said the CEO. “We are especially proud of our 9.0% comparable sales growth in the quarter, which brings our annual comparable sales growth to 5.6% for the year.”

Shares surged after earnings report.

Returning Capital to Shareholders

Best Buy continues to boost shareholders’ value through dividends and share repurchases. With latest results, they announced a 32% increase in the regular quarterly dividend to $0.45 per share and a share repurchase plan of $1.5 billion for FY19.

Rising Estimates

Zacks Consensus Estimates for current and next fiscal years have surged to $4.79 per share and $5.02 per share respectively, up from $4.65 and $4.73, before the results. The company has missed only once in the past twenty quarters. Their average quarterly beat for the last four quarters was 19%.

Best Buy Co., Inc. Price, Consensus and EPS Surprise

Best Buy Co., Inc. Price, Consensus and EPS Surprise | Best Buy Co., Inc. Quote

Bottom Line

The retailer has improved its merchandize, marketing and in-store shopping experience over the past 3-4 years. They have also increased focus on their online channel.

Further, certain shopping experiences are possible only in physical stores and cannot be replicated online. If Best Buy continues to provide excellent shopping experience and prevent shoppers from buying on Amazon by matching their prices, they will likely continue their winning streak.

In addition to a top Zacks Rank of #1 (Strong Buy), the stock has a VGM Score of “A”. Further, it has a juicy dividend yield of 1.8%, which will go up further.

“Retail – Consumer Electronics” industry is also hot, currently ranked 3 out of 265 Zacks Industries (top 1%).

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