Best Buy (BBY) on Fire: What's Behind its Robust Show?
Is Best Buy Co., Inc. BBY part of your portfolio? If not, this is the right time to add the stock as it looks quite promising. This Zacks Rank #1 (Strong Buy) stock seems to be riding on its initiatives, “Best Buy 2020: Building the New Blue” strategy and stellar earnings history.
Shares of this multinational retailer have not only outpaced the Zacks categorized Retail-Consumer Electronics industry, but also the broader sector in the past one year. Whilethe stock surged 40.2% compared with the industry’s gain of 24.8%, the Zacks categorized Retail-Wholesale sector returned 9.2%.
We believe that Best Buy is a sound investment opportunity, as evident from its VGM Score of “A” and long-term earnings growth rate of 10.5%.
Best Buy has been consistently beating bottom-line estimates in the last 17 quarters, including fourth-quarter fiscal 2017. In the said quarter, the company’s bottom line was driven by sound promotional strategy, continuous optimization of merchandise margins as well as due to efficient expense management. However, on the revenues front the company disappointed investors by missing our estimate after surpassing the same in the preceding three quarters.
Management now projects earnings in the range of 30–40 cents a share for the first quarter of fiscal 2018. The Zacks Consensus Estimate for the said quarter is currently pegged at 39 cents.
Best Buy Co., Inc. Price and Consensus
Best Buy Co., Inc. Price and Consensus | Best Buy Co., Inc. Quote
Moreover, the Zacks Consensus Estimate of $3.68 and $3.94 for fiscal 2018 and fiscal 2019 increased 19 cents and 25 cents, respectively, over the last 30 days.
Growth Catalysts
Best Buy is making extensive investments to upgrade operations with special focus on developing omni-channel capabilities and strengthening partnership with vendors. Moreover, following the successful completion of the “Renew Blue” program, the company has launched a fresh strategy called “Best Buy 2020: Building the New Blue”. Under this strategy, the top-most priority for fiscal 2018 will be exploring and pursuing growth opportunities, better execution in key areas, cost optimization and investing in people as well as systems to drive growth, implementation and efficiencies. Notably, the company has already achieved the $350 million of cost-reduction target out of $400 million under the “Renew Blue” program.
In fact, the company is leaving no stone unturned to attract consumers and attain incremental revenues, as is evident from its store-in-a-store concept. We believe this strategy to be a game changer for the company, as it facilitates the display of different brands under one roof and ensures a larger footfall.
Other Stocks You May Consider
Some other favorably placed stocks in the broader Retail-Wholesale space include The Children's Place, Inc. PLCE, Kate Spade & Company KATE and Foot Locker, Inc. FL.
The Children's Place, with a long-term earnings growth rate of 10.3%, has surged nearly 43% in the past six months. The stock sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Kate Spade & Company, a Zacks Rank #1 stock, has jumped 62.6% in the past three months. Moreover, it has an impressive long-term earnings growth rate of 28.3%.
Foot Locker, which carries a Zacks Rank #2 (Buy), has increased 15.1% in the past one year. Further, it has a long-term earnings growth rate of 9.7%.
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Foot Locker, Inc. (FL): Free Stock Analysis Report
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