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Best Buy (BBY) Queued Up for Q3 Earnings: What's in the Cards?

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·5 min read
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Best Buy Co., Inc. BBY is likely to register a decline in the top and the bottom line from the respective prior-year quarter’s reported numbers when it reports third-quarter fiscal 2022 results on Nov 23, before the opening bell.

The Zacks Consensus Estimate for revenues is pegged at $11,602 million, which indicates a decline of 2.2% from the year-ago quarter’s reported figure. Although the Zacks Consensus Estimate for quarterly earnings has been stable in the past 30 days at $1.91 per share, the same suggests a decrease of 7.3% from the year-ago quarter’s tally.

BBY delivered an earnings surprise of 56% in the last reported quarter. This specialty retailer of consumer products has a trailing four-quarter earnings surprise of 31.9%, on average.

Key Aspects to Note

Best Buy’s quarterly performance is likely to have faced tough year-over-year comparisons in sales due to the absence of the pandemic-led benefits, which were present in the year-earlier quarter.

On its last earnings call, management had projected an enterprise comparable sales decline of 1-3% for the to-be-reported quarter against growth of 23% witnessed in the year-earlier quarter. Enterprise revenues were forecast within $11.4-$11.6 billion, down from $11.9 million seen in the third quarter of fiscal 2021. Best Buy anticipated adjusted gross margin to fall nearly 30 basis points year over year.

We cannot ignore the headwinds like rising expenses that might have put some pressure on the margins. Best Buy has been witnessing higher incentive compensation expense, elevated investments in technology and increased store payroll charges for a while. In addition, pandemic-related issues, including supply-chain disruptions cannot be ruled out.

On the flip side, Best Buy’s focus on developing omni-channel capabilities including buy online, pickup in store services, curbside pickup, ship-from-store or employees delivering products to customers, is quite encouraging.

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. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Best Buy Co., Inc. Price and EPS Surprise

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

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

Although Best Buy has a Zacks Rank #2 at present, its Earnings ESP of 0.00% makes surprise prediction difficult.

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 beat on earnings this season:

Costco COST currently has an Earnings ESP of +1.00% and a Zacks Rank of 2. It is likely to register top and bottom-line growth when it reports first-quarter fiscal 2022 numbers. The Zacks Consensus Estimate for quarterly earnings has moved 2.8% up in the past 30 days to $2.59 per share, suggesting an improvement of 13.1% from the year-ago quarter’s tally.

The Zacks Consensus Estimate for Costco's quarterly revenues is pegged at $49.6 billion, which suggests growth of 14.8% from the figure reported in the prior-year quarter. COST delivered an earnings surprise of 7.7%, on average, in the trailing four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.

Urban Outfitters URBN currently has an Earnings ESP of +6.27% and a Zacks Rank #3. URBN is expected to report a top- and bottom-line improvement when it releases third-quarter fiscal 2022 numbers. The Zacks Consensus Estimate for quarterly earnings has moved 3.7% north in the past seven days to 84 cents per share, suggesting 7.7% growth from the year-ago period’s reported number.

The Zacks Consensus Estimate for Urban Outfitters’ quarterly revenues is pegged at $1.1 billion, which suggests a rise of 16.1% from the figure reported in the prior-year quarter. URBN delivered an earnings surprise of 92.2%, on average, in the trailing four quarters.

Kroger KR currently has an Earnings ESP of +3.70% and a Zacks Rank of 3. It is likely to post a top-line rise when it reports third-quarter fiscal 2021 numbers. Although the Zacks Consensus Estimate for quarterly earnings has increased 1.5% in the past seven days to 66 cents per share, the same suggests a decline of about 7% from the year-ago period’s tally.

The Zacks Consensus Estimate for Kroger’s quarterly revenues is pegged at $31 billion, suggesting an increase of 4.4% from the figure reported in the prior-year quarter. KR delivered an earnings surprise of 18%, on average, in the trailing four quarters.


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