Retail
Best Buy's Earnings Pushing Stock to All-Time High, Then It Collapses
Published:
Last Updated:
Best Buy Co. Inc. (NYSE: BBY) reported fiscal 2018 second-quarter results before markets opened Tuesday. The big-box retailer of electronics gear reported adjusted diluted earnings per share (EPS) of $0.69 and $8.94 billion in revenues. In the same period a year ago, Best Buy posted EPS of $0.57 on revenue of $8.53 billion. Second-quarter results also compare to consensus estimates for $0.63 EPS and $8.66 billion in revenue.
Enterprise level same-store sales rose 4.8% year over year in the quarter, and domestic sales rose by the same amount. In the United States, same-store sales jumped 5.4% in the quarter and online sales rose by 31%.
In the second quarter, Best Buy repurchased 7.3 million shares of stock valued at $398 million and paid out $103 million in dividends. The company’s cumulative share repurchases, net of dilution from equity-based awards, positively benefitted GAAP and non-GAAP diluted EPS by $0.02 in the second quarter.
The company’s chairman and CEO, Hubert Joly, said:
Our higher-than-expected comparable sales of 5.4% were driven by stronger consumer demand for technology products and by the strong execution of our strategy. Against a backdrop of continued healthy consumer confidence, we believe broad-based product innovation is resonating with consumers and driving higher spend.
Best Buy raised its full-year revenue growth guidance from a previous estimate of 2.5% to 4.0% and now expects non-GAAP operating income growth of 4% to 9%, up by 0.4% at both ends from the prior guidance. For the full fiscal year, analysts have forecast EPS at $3.90 on sales of $40.48 billion.
Best Buy expects third-quarter 2018 adjusted diluted EPS in a range of $0.75 to $0.80. Analysts are expecting third-quarter EPS of $0.65 on sales of $8.99 billion.
The big change in product mix in the company’s domestic segment was sales of entertainment gear. Same-store sales rose 15.4% (from a very low comparable last year) and entertainment contributed 6% of Best Buy’s quarterly revenues compared with 5% in the year-ago quarter. Same-store sales of appliances rose 5.8% year over year, and appliances contributed 11% to total domestic revenues in the quarter.
Shares traded up more than 3% at $64.38, above the 52-week range of $36.51 to $63.32. The consensus 12-month price target was $60.69 before results were announced, with a high target of $72.00. The stock closed at $62.47 on Monday.
The Average American Is Losing Their Savings Every Day (Sponsor)
If you’re like many Americans and keep your money ‘safe’ in a checking or savings account, think again. The average yield on a savings account is a paltry .4% today, and inflation is much higher. Checking accounts are even worse.
Every day you don’t move to a high-yield savings account that beats inflation, you lose more and more value.
But there is good news. To win qualified customers, some accounts are paying 9-10x this national average. That’s an incredible way to keep your money safe, and get paid at the same time. Our top pick for high yield savings accounts includes other one time cash bonuses, and is FDIC insured.
Click here to see how much more you could be earning on your savings today. It takes just a few minutes and your money could be working for you.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
