Shares of Bed Bath & Beyond Inc. (BBBY) dipped after the retailer missed the mark, reporting lower-than-expect revenue for the third quarter.
Is now the time to buy BBBY on a dip?
Bed Bath & Beyond – Company Overview
If you have a kid in college or if you are in charge of your home’s decor, you have probably stepped foot in a Bed Bath & Beyond. There are more than 1,000 Bed Bath & Beyond stores spread across North America, and they specialize in selling home furnishings as well as food, giftware, beauty care items and baby merchandise.
Bed Bath & Beyond also has 58,000 full-time employees. Bed Bath & Beyond also operates a number of other store chains, including Christmas Tree Shops, Harmon, Harmon Face Values and buybuy Baby.
Bed Bath & Beyond is also completed a $1.1 billion stock repurchase program in December 2014.
Bed Bath & Beyond – Earnings Rundown
In the third quarter, Bed Bath & Beyond reported net earnings of $225.4 million or $1.23 per share. Net sales increased 2.7% to $2.94 billion.
Analysts had called for $1.19 earnings-per-share on $2.97 billion in sales. So, Bed Bath & Beyond posted a 3.4% earnings surprise and a 1% sales miss.
Looking ahead to the fourth quarter, BBBY management anticipates earnings between $1.78 and $1.83 per share. For fiscal 2014, BBBY expects earnings between $5.05 and $5.09 per share. Consensus estimates are $1.80 per share for the quarter and $5.04 per share for the fiscal year. So, Bed Bath & Beyond’s guidance was stronger than expected.
Bed Bath & Beyond – Current Ratings
Before you buy any stock, you should always run it through my free Portfolio Grader ratings system. BBBY stock has sustained significant losses over the last 12 months because of BBBY’s weak buying pressure.
BBBY currently receives a D for its Quantitative Grade. On the fundamentals side, Bed Bath & Beyond also needs some work. Of the eight financial metrics I graded it on, BBBY received Cs on five (including: analyst earnings revisions, operating margin growth, earnings growth, earnings momentum and earnings surprises). Sales growth needs the most improvement, earning a D grade.
Bed Bath & Beyond’s bright spots are in its cash flow and return on equity; both metrics earn A-grades. However, together these eight grades average a C Fundamental Grade.
As of this posting, Jan. 12, I consider BBBY a C-rated “hold.”
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
