Best Buy Q3 Earnings Preview: BBY Up 16.4% Since Last Report

in EARNINGS/INVESTING IDEAS by

Best Buy Co., Inc. (NYSE:BBY) is scheduled to report Q3 earnings results on November 26, 2019, 07:00 AM CST. You can find more information about the conference call here.

The company is expected to report earnings of $1.03/share on revenue of $9.708 billion. The consensus earnings per share (EPS) of $1.03/share is based on a poll of 25 analysts and represents a growth of 10.8% over the same quarter last year when the company reported earnings of $0.93/share.

The revenue forecast of $9.708 billion based on a poll of 24 analysts implies a year-over-year (YoY) growth of 1.2%. Last year the company reported $9.59 billion in revenue for the quarter.

Expected to report EPS growth of $0.10/share for Q3, 2019
Metric Expected Prior Year YoY Change
Revenue $9,707.69 $9,590.00 1.2%
EPS $1.03 $0.93 10.8%

Earnings Call Trends

Historically, management has exceeded analyst expectations 7 out of the last 8 tracked quarters, and missed expectations 1 quarter. What are your expectations from Best Buy for earnings this quarter? Let us know in the comments!

Analyst Expected vs Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.99 $1.08 9.1% Beat
Q1, 2020 $0.87 $1.02 17.2% Beat
Q4, 2019 $2.55 $2.72 6.7% Beat
Q3, 2019 $0.84 $0.93 10.7% Beat
Q2, 2019 $0.82 $0.91 11.0% Beat
Q1, 2019 $0.74 $0.82 10.8% Beat
Q4, 2018 $2 $2.42 20.7% Beat
Q3, 2018 $0.79 $0.78 -1.3% Missed

One question we always consider here at the Bankers’ Tribune is how important are earnings reports to Best Buy’s stock price performance? It’s more important for some companies than for others.

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending August 3, 2019, the stock price reacted by falling by -7.8%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-08-29 $69 $63.65 -7.8% Decline
2019-05-23 $69.17 $65.94 -4.7% Decline
2019-02-27 $60.31 $68.84 14.1% Increase
2018-11-20 $62.20 $62.09 -0.2% Decline

Fundamentals And Technical Analysis

Best Buy is currently trading at $74.12/share, up 2.0% for the day. The company is trading at approximately 94.4% of its 52-week high of $78.53/share. The company’s stock price is up 16.4% since the last earnings report and down -4.1% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 50.37 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.

The current share price implies a price-to-earnings (P/E) multiple of 12.6x and a forward P/E multiple of 12.5x. Best Buy’s current share price also implies a price-to-book (P/B) multiple of 5.8x. The following table summarizes some other key fundamental ratios:

Data as of November 25, 2019
Metric Value
Last Fiscal Period FY2020.Q2
Period End Date August 3, 2019
Stock Price (Current) $74.12
P/E Ratio 12.6x
P/E Ratio (Fwd) 12.5x
PEG Ratio 20.2
Total Debt to Capital (%) 17.8%
Levered Free Cash Flow $1.096 billion
Enterprise Value / EBITDA 7.6x

Source: Finbox

Company Profile: Best Buy Co., Inc.

Best Buy Co., Inc. is a large-cap stock with a market capitalization of $19.146 billion and a total enterprise value of $21.559 billion. The company operates in the Consumer Discretionary sector and Specialty Retail industry.

Best Buy Co., Inc. operates as a retailer of technology products, services, and solutions in the United States, Canada, and Mexico. The company operates in two segments, Domestic and International. Its stores provide Computing and Mobile Phones, such as computing and peripherals, e-readers, networking products, tablets, and wearables, as well as mobile phones comprising related mobile network carrier commissions; consumer electronics, including digital imaging, health and fitness, home theater, portable audio, and smart home products; and entertainment products consisting of drones, movies, music, and toys, as well as gaming hardware and software, and virtual reality and other software products.

The company’s stores also offer appliances, such as dishwashers, laundry appliances, ovens, refrigerators, blenders, coffee makers, and vacuums; and other products, such as beverages, snacks, and sundry items, as well as baby products, luggage, and sporting goods. In addition, it provides services comprising consultation, design, delivery, installation, memberships, protection plans, repair, set-up, and technical support services, as well as connected health services for aging consumers.

The company offers its products through stores and Websites under the Best Buy, bestbuy.com, Best Buy Direct, Best Buy Express, Best Buy Mobile, Geek Squad, GreatCall, Magnolia, Pacific Kitchen and Home, bestbuy.ca, and bestbuy.com.mx brand names, as well as through mobile applications and call centers.

As of February 2, 2019, it had approximately 1,187 large-format and 51 small-format stores. The company was formerly known as Sound of Music, Inc. Best Buy Co., Inc. was founded in 1966 and is headquartered in Richfield, Minnesota.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.