Best Buy (NYSE:BBY) is scheduled to release its second-quarter results on Aug 29, before the opening bell. We note that in the trailing four quarters, the company outperformed the Zacks Consensus Estimate, recording an average positive earnings surprise of 10.2%. In the last reported quarter, the company delivered a positive earnings surprise of 15.9%. Let’s see how it is positioned ahead of the upcoming quarterly results.
Estimates Look Bright
The Zacks Consensus Estimate for BBY’s Q2 earnings is 99 cents, indicating an increase of 8.8% from the 91 cents BBY reported in the year-ago quarter. Notably, the consensus mark has remained unchanged over the past 30 days.
For revenues, the consensus estimate stands at $956.7 million, suggesting an increase of about 2% from the year-ago quarter.
Best Buy Co., Inc. Price, Consensus and EPS Surprise
Factors Likely to Influence BBY’s Results
Best Buy’s extensive investments 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, bode well for its results. These endeavors are expected to drive the company’s top line and overall profitability.
Further, BBY is leaving no stone unturned to attract consumers and attain incremental revenues. It is concentrating on enhancing its mobile-phone offerings in its big-box stores as well as online under its Mobile 2020 strategy. Also, it has launched a new strategy that focuses on expanding its multi-channel retail business, and offering services and solutions that meet customers’ needs.
Notably, BBY has been smoothly progressing with the implementation of this strategy by improving its In-Home Advisor program and expanding the Total Tech Support program to boost customers’ experience. Its overall strategy focuses on exploring and pursuing growth opportunities, executing better in key areas, optimizing costs, and investing in people and systems. Such well-developed plans are likely to drive its Q2 results.
For Q2, management anticipates Enterprise revenues of $9.5-$9.6 billion and comparable store sales growth of 1.5-2.5%. Also, the company expects its gross profit rate to improve in the fiscal second quarter compared with same period last year.
However, Best Buy ‘s SG&A expenses are rising, mainly due to higher operating expenses for GreatCall, its online health services provider, and increased advertising spend. It expects SG&A expenses to rise in the low to mid-single-percentage digits in Q2. Also, higher cost of investments in technology and wages plus increased transportation costs may hurt its margins.
What Our Model Says About BBY
Our proven model does not conclusively predict that Best Buy ‘s Q2 results are likely to beat expectations. A stock needs to have — a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP — for this to be the case. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Best Buy has an Earnings ESP of 0.00% and a Zacks Rank #3 at present, which makes surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks With Favorable Combination
Here are some companies that you may want to consider as our model shows that these have the right combination of elements to post earnings beat.
Casey’s General Stores. (NASDAQ: CASY) presently has an Earnings ESP of +8.43% and a Zacks Rank #1.
Burlington Stores (NYSE:BURL) currently has an Earnings ESP of +0.17% and a Zacks Rank #2.
Costco (NASDAQ:COST) has an Earnings ESP of +0.30% and a Zacks Rank #3 at present.
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Best Buy Co., Inc. (BBY): Free Stock Analysis Report
Caseys General Stores, Inc. (CASY): Free Stock Analysis Report
Burlington Stores, Inc. (BURL): Free Stock Analysis Report
Costco Wholesale Corporation (COST): Free Stock Analysis Report
