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Best Buy (BBY) to Post Q2 Earnings: What Awaits the Stock?

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Best Buy Co., Inc. BBY is likely to register top- and bottom-line growth when it reports second-quarter fiscal 2022 numbers on Aug 24, before the opening bell. The Zacks Consensus Estimate for revenues is pegged at $11,600 million, which indicates an increase of 17.1% from the year-ago quarter’s reported figure.

The Zacks Consensus Estimate for quarterly earnings has been stable in the past 30 days at $1.91 per share. The consensus mark suggests a rise of 11.7% from earnings of $1.71 reported in the year-ago quarter. The company delivered an earnings surprise of 53.8% in the last reported quarter. This specialty retailer of a variety of consumer products has a trailing four-quarter earnings surprise of 32.1%, on average.

Key Aspects to Note

Best Buy’s top line during the second quarter is likely to have gained from consumers’ continued inclination toward technology-related products and services. Despite increased outdoor movement, thanks to the easing of pandemic-led restrictions, consumers continue to show interest in their homes and have been investing in technologies and products that support a comfortable home lifestyle. This is likely to have favored sales in product categories such as computing devices, home theatre and appliances.

The company’s strong supply chain expertise, flexible store operating model and ability to shift quickly to digital have been supporting its performance. Speaking about digital strength, Best Buy’s strong online presence is likely to have remained an upside during the quarter in review. Markedly, the company’s well-chalked delivery systems have been boosting online revenues. In fact, almost all its stores offer same-day delivery services. The company is on track with adding new functionalities to its curbside pickup services. Such prudent measures are likely to have boosted Best Buy’s online sales during the first quarter.

The company is also expanding its advisory functions, which includes guiding customers to find the right technology solutions and accordingly provide in-home or in-store consultations. Such efforts along with efficient programs like Total Tech Support are likely to have aided the company’s performance in the second quarter.

However, we cannot ignore the headwinds surrounding rising expenses that might have put some pressure on margins. The company is incurring higher incentive compensation and other variable expenses. In its last earnings call, management stated that selling, general and administrative expenses are likely to rise nearly 20% in the second quarter. Also, supply chain disruptions due to the pandemic are a concern.

Best Buy Co., Inc. Price, Consensus and EPS Surprise

Best Buy Co., Inc. Price, Consensus and EPS Surprise
Best Buy Co., Inc. Price, Consensus and EPS Surprise

Best Buy Co., Inc. price-consensus-eps-surprise-chart | Best Buy Co., Inc. Quote

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Best Buy this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Best Buy has a Zacks Rank #3 and an Earnings ESP of 0.00%.

Stocks With Favorable Combination

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Burlington Stores, Inc. BURL currently has an Earnings ESP of +15.26% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Costco Wholesale Corporation COST currently has an Earnings ESP of +0.44% and carries a Zacks Rank #3.

Abercrombie & Fitch Company ANF currently has an Earnings ESP of +6.14% and a Zacks Rank #3.


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Abercrombie & Fitch Company (ANF) : Free Stock Analysis Report

Best Buy Co., Inc. (BBY) : Free Stock Analysis Report

Costco Wholesale Corporation (COST) : Free Stock Analysis Report

Burlington Stores, Inc. (BURL) : Free Stock Analysis Report

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