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Here's Why Best Buy (BBY) Looks Poised for Earnings Beat in Q4
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Best Buy Co., Inc. (BBY - Free Report) is likely to register year-over-year declines in the top and bottom lines when it reports its fourth-quarter fiscal 2024 results on Feb 29, before the opening bell.
The Zacks Consensus Estimate for revenues is pegged at $14,517 million, indicating a 1.5% decrease from the year-ago quarter’s reported figure. The consensus estimate for quarterly earnings has been unchanged at $2.51 in the past 30 days, suggesting a 3.8% plunge from the year-ago quarter’s reported figure.
BBY delivered an earnings surprise of 8.4% in the last reported quarter. This specialty retailer of consumer products has a trailing four-quarter earnings surprise of 12.8%, on average.
Best Buy Co., Inc. Price, Consensus and EPS Surprise
Best Buy has been witnessing macroeconomic challenges from the dual pressures of high inflation and interest rate hikes, affecting product demand. In the last reported quarter’s earnings call, management expected the macro environment to continue to pressurize demand in the near term, which is likely to have impacted its top-line performance in the fiscal fourth quarter. Supply-chain costs are likely to have affected the fiscal fourth quarter, contrasting with the benefits seen in the fiscal third quarter.
In the third-quarter earnings call, Best Buy expected its fourth-quarter fiscal 2024 comparable sales to decrease 3-7%. As of the first three weeks of November 2023, its Enterprise comparable sales were near the lower end of this forecast range.
The company has been encountering low demand across several product categories, including appliances, home theater, computing and mobile phones, which are anticipated to get reflected in the results of its Domestic segment. Soft demand, higher spending outside the home category in areas such as travel and entertainment, and a high inflationary environment are expected to have hurt the international segment’s results in the to-be-reported quarter.
Our estimate for fiscal fourth-quarter net sales from the Domestic and International segments is pegged at $13,451.4 million and $1173.3 million, respectively, suggesting year-over-year declines of 0.6% and 2.6%, respectively.
However, Best Buy’s focus on boosting its omnichannel services, such as buy online, pickup in store services and curbside pickup, is expected to have increased customer engagement and driven its performance. The company has been offering free next-day delivery on several items, along with convenience store and curbside pickup options.
For the fiscal fourth quarter, it anticipates an adjusted operating margin of 4.7-5%, whereas it reported 4.8% in the prior year. SG&A expenses, as a percentage of sales, are expected to have been more favorable in the quarter under review due to one extra week.
Best Buy has launched significant changes to its Totaltech program that provide customers with more flexibility to choose memberships that fit their technology needs, budget and lifestyle. BBY’s optimization efforts in several areas, including the membership program, health initiatives and cost-control measures, are expected to have expanded its gross margin in the fiscal fourth quarter. We expect an adjusted gross margin of 20.3% for the quarter under review, implying a year-over-year improvement of 30 basis points.
What the Zacks Model Unveils
Our proven model conclusively predicts an earnings beat for Best Buy this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is the case here.
Best Buy has a Zacks Rank #3 and an Earnings ESP of +0.64% at present. You can uncover the best stocks before they are reported with our Earnings ESP Filter.
Stocks Poised to Beat Earnings Estimates
Here are some companies worth considering, as our model shows that these have the right combination of elements to beat earnings this season.
Costco Wholesale (COST - Free Report) presently has an Earnings ESP of +1.58% and a Zacks Rank of 2. The company is slated to register top and bottom-line growth when it reports second-quarter fiscal 2024 results. The Zacks Consensus Estimate for COST’s quarterly revenues is pegged at $59.2 billion, which suggests growth of 7.1% from the figure reported in the prior-year quarter.
The consensus estimate for Costco Wholesale’s quarterly earnings has moved up 1.1% in the past 30 days to $3.60 per share, suggesting growth of 9.1% from the year-ago quarter’s reported number. COST delivered an earnings surprise of 2.6%, on average, in the trailing four quarters.
Burlington Stores (BURL - Free Report) currently has an Earnings ESP of +1.27% and a Zacks Rank #3. The company is likely to register top and bottom-line growth when it reports fourth-quarter fiscal 2023 results. The Zacks Consensus Estimate for the quarterly EPS of $3.25 suggests an increase of 9.8% from the year-ago quarter. The consensus estimate for earnings has moved up by a penny in the past 30 days.
The consensus mark for BURL’s revenues is pegged at $3.02 billion, indicating an increase of 9.9% from the figure reported in the year-ago quarter. BURL has a trailing four-quarter earnings surprise of 9.4%, on average.
Guess (GES - Free Report) has an Earnings ESP of +4.25% and a Zacks Rank of 3 at present. The company is likely to register top-line growth when it reports fourth-quarter fiscal 2023 results. The Zacks Consensus Estimate for quarterly revenues is pegged at $855.5 million, which indicates a decline of 4.6% from the year-ago quarter.
The consensus mark for GES’ fourth-quarter fiscal 2023 earnings per share is pegged at $1.55, suggesting a 10.9% year-over-year decline. The consensus estimate for earnings has been unchanged in the past 30 days. GES has a trailing four-quarter earnings surprise of 43.1%, on average.
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Here's Why Best Buy (BBY) Looks Poised for Earnings Beat in Q4
Best Buy Co., Inc. (BBY - Free Report) is likely to register year-over-year declines in the top and bottom lines when it reports its fourth-quarter fiscal 2024 results on Feb 29, before the opening bell.
The Zacks Consensus Estimate for revenues is pegged at $14,517 million, indicating a 1.5% decrease from the year-ago quarter’s reported figure. The consensus estimate for quarterly earnings has been unchanged at $2.51 in the past 30 days, suggesting a 3.8% plunge from the year-ago quarter’s reported figure.
BBY delivered an earnings surprise of 8.4% in the last reported quarter. This specialty retailer of consumer products has a trailing four-quarter earnings surprise of 12.8%, on average.
Best Buy Co., Inc. Price, Consensus and EPS Surprise
Best Buy Co., Inc. price-consensus-eps-surprise-chart | Best Buy Co., Inc. Quote
Key Aspects to Note
Best Buy has been witnessing macroeconomic challenges from the dual pressures of high inflation and interest rate hikes, affecting product demand. In the last reported quarter’s earnings call, management expected the macro environment to continue to pressurize demand in the near term, which is likely to have impacted its top-line performance in the fiscal fourth quarter. Supply-chain costs are likely to have affected the fiscal fourth quarter, contrasting with the benefits seen in the fiscal third quarter.
In the third-quarter earnings call, Best Buy expected its fourth-quarter fiscal 2024 comparable sales to decrease 3-7%. As of the first three weeks of November 2023, its Enterprise comparable sales were near the lower end of this forecast range.
The company has been encountering low demand across several product categories, including appliances, home theater, computing and mobile phones, which are anticipated to get reflected in the results of its Domestic segment. Soft demand, higher spending outside the home category in areas such as travel and entertainment, and a high inflationary environment are expected to have hurt the international segment’s results in the to-be-reported quarter.
Our estimate for fiscal fourth-quarter net sales from the Domestic and International segments is pegged at $13,451.4 million and $1173.3 million, respectively, suggesting year-over-year declines of 0.6% and 2.6%, respectively.
However, Best Buy’s focus on boosting its omnichannel services, such as buy online, pickup in store services and curbside pickup, is expected to have increased customer engagement and driven its performance. The company has been offering free next-day delivery on several items, along with convenience store and curbside pickup options.
For the fiscal fourth quarter, it anticipates an adjusted operating margin of 4.7-5%, whereas it reported 4.8% in the prior year. SG&A expenses, as a percentage of sales, are expected to have been more favorable in the quarter under review due to one extra week.
Best Buy has launched significant changes to its Totaltech program that provide customers with more flexibility to choose memberships that fit their technology needs, budget and lifestyle. BBY’s optimization efforts in several areas, including the membership program, health initiatives and cost-control measures, are expected to have expanded its gross margin in the fiscal fourth quarter. We expect an adjusted gross margin of 20.3% for the quarter under review, implying a year-over-year improvement of 30 basis points.
What the Zacks Model Unveils
Our proven model conclusively predicts an earnings beat for Best Buy this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is the case here.
Best Buy has a Zacks Rank #3 and an Earnings ESP of +0.64% at present. You can uncover the best stocks before they are reported with our Earnings ESP Filter.
Stocks Poised to Beat Earnings Estimates
Here are some companies worth considering, as our model shows that these have the right combination of elements to beat earnings this season.
Costco Wholesale (COST - Free Report) presently has an Earnings ESP of +1.58% and a Zacks Rank of 2. The company is slated to register top and bottom-line growth when it reports second-quarter fiscal 2024 results. The Zacks Consensus Estimate for COST’s quarterly revenues is pegged at $59.2 billion, which suggests growth of 7.1% from the figure reported in the prior-year quarter.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for Costco Wholesale’s quarterly earnings has moved up 1.1% in the past 30 days to $3.60 per share, suggesting growth of 9.1% from the year-ago quarter’s reported number. COST delivered an earnings surprise of 2.6%, on average, in the trailing four quarters.
Burlington Stores (BURL - Free Report) currently has an Earnings ESP of +1.27% and a Zacks Rank #3. The company is likely to register top and bottom-line growth when it reports fourth-quarter fiscal 2023 results. The Zacks Consensus Estimate for the quarterly EPS of $3.25 suggests an increase of 9.8% from the year-ago quarter. The consensus estimate for earnings has moved up by a penny in the past 30 days.
The consensus mark for BURL’s revenues is pegged at $3.02 billion, indicating an increase of 9.9% from the figure reported in the year-ago quarter. BURL has a trailing four-quarter earnings surprise of 9.4%, on average.
Guess (GES - Free Report) has an Earnings ESP of +4.25% and a Zacks Rank of 3 at present. The company is likely to register top-line growth when it reports fourth-quarter fiscal 2023 results. The Zacks Consensus Estimate for quarterly revenues is pegged at $855.5 million, which indicates a decline of 4.6% from the year-ago quarter.
The consensus mark for GES’ fourth-quarter fiscal 2023 earnings per share is pegged at $1.55, suggesting a 10.9% year-over-year decline. The consensus estimate for earnings has been unchanged in the past 30 days. GES has a trailing four-quarter earnings surprise of 43.1%, on average.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.