What to Expect From Bed Bath & Beyond Earnings

Retail

Published: September 23, 2015 1:15 pm

Last Updated: September 23, 2015 1:17 pm

Bed Bath & Beyond Inc. (NASDAQ: BBBY) is scheduled to report its fiscal second-quarter financial results after the markets close on Thursday. The consensus estimates from Thomson Reuters call for $1.21 in earnings per share (EPS) on $3.03 billion in revenue. In the same period of the previous year, the specialty retailer posted EPS of $1.17 and $2.94 billion in revenue.

This is a top retailing company and is the fourth-ranked stock on the Merrill Lynch list of buyback leaders. The company operates stores under the names of Bed Bath & Beyond, Christmas Tree Shops, andThat!, Harmon, buybuy BABY, World Market and Cost Plus.

Public since the early 1990s, Bed Bath & Beyond has been a massive growth story for years. The company has faced some serious growing pressure in recent history, but management turned to stock buybacks to juice up the returns again. Shares were relatively near all-time highs early in 2015, although they have receded recently. What is amazing is that no dividend has been paid in its 20-year history. With only about 3% revenue growth being the norm, it is time to start rewarding investors here by paying them to own the stock.

Bed Bath & Beyond is worth about $10 billion in market cap, but it has bought back over $7 billion in stock since 2004. It has only about $1.5 billion in long-term debt. Acquisitions have also been a source of growth, but at 11.4 times earnings, Bed Bath & Beyond could easily fund a 1.5% to 2.0% dividend yield — and still have more than enough liquidity for opportunistic contingencies or for more buybacks, if they save the buybacks for when shares are weak.

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Prior to the release of the earnings report, a few analysts weighed in:

Wedbush reiterated a Hold rating with a $70 price target.
Deutsche Bank reiterated a Hold rating.
SunTrust reiterated a Buy rating with an $88 price target.

Shares of Bed Bath & Beyond were down 0.7% to $59.66 on Wednesday afternoon. The stock has a consensus analyst price target of $72.88 and a 52-week trading range of $58.81 to $79.64.

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