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Will Best Buy (BBY) Earnings Continue to Increase in Q3?

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Best Buy Co., Inc. (BBY - Free Report) is scheduled to report third-quarter fiscal 2020 results on Nov 26, before the opening bell. We note that in the trailing four quarters, the company outperformed the Zacks Consensus Estimate by 10.1%, on average. In the last reported quarter, the company delivered a positive earnings surprise of 9.1%.

What to Expect This Time

The Zacks Consensus Estimate for third-quarter earnings has remained unchanged over the past 30 days to $1.04. This suggests a rise of 11.8% from the year-ago quarter’s reported figure.

For revenues, the consensus mark is pegged at $9,732 million, indicating an increase of 1.5% from the figure reported in the year-ago quarter.

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

Key Things to Note

Best Buy has been extensively investing to upgrade operations, with special focus on developing omni-channel capabilities, stores and supply chain, new business initiatives, cost-reduction opportunities, and strengthening partnerships with vendors. It has been making a significant headway into healthcare technology business by undertaking strategic buyouts in the space. Also, the company is on track with the next phase of its “Building the New Blue” program called “Building the New Blue: Chapter Two”.

The company has been progressing well with programs like Total Tech Support, which provides assistance for fixing computers, laptops, appliances, smart home devices and connected devices. Further, Best Buy expanded its In-Home Advisor program to core U.S. markets.

In the last earnings call, the company projected Enterprise revenues of $9.65-$9.75 billion and comps growth of 0.5-1.5% for the fiscal third quarter. Also, management expects third-quarter adjusted earnings of $1.00-$1.05 per share.

However, Best Buy has been witnessing increase in SG&A expenses mainly due to higher cost involved in GreatCall. Management anticipates low single-digit increase in SG&A expenses for the third quarter. Moreover, continued sluggishness in international segment on account of adverse currency fluctuations remains a concern.

Zacks Model

Our proven model does not conclusively predict 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. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Best Buy carries a Zacks Rank #3 but an Earnings ESP of 0.00%.

Stocks Poised to Beat Earnings Estimates

Here are a few companies you may want to consider, as our model shows that these have the right combination to post an earnings beat:

Burlington Stores (BURL - Free Report) has an Earnings ESP of +0.44% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

DICK'S Sporting Goods, Inc. (DKS - Free Report) has an Earnings ESP of +3.54% and a Zacks Rank #3.

Dollar General (DG - Free Report) has an Earnings ESP of +0.47% and a Zacks Rank #3.

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