Best Buy Helped by Leasing Option, Investment In Services
Best Buy Co. Inc. (NYSE: BBY) may be the quintessential big box store, but some outside-the-box thinking is helping the company’s performance in a tough industry, analysts say.
Best Buy reported its most promising same-store sales figures in years and above-estimate earnings Wednesday, while also issuing positive first quarter and full-year guidance.
Two items not directly related to laptop and TV sales impressed Street analysts. One: Best Buy has a good chance to boost sales through a new lease-to-own program partnership. Two: the company’s move into providing services is promising, analysts said.
The Analysts
KeyBanc Capital Markets analyst Bradley Thomas maintained a Sector Weight rating on Best Buy.
Tigress Financial Partners analyst Ivan Feinseth doesn’t have a rating on Best Buy, but talked it up in a note to investors Thursday after the company’s positive quarterly results.
KeyBanc
Best Buy is rolling out the lease-to-own partnership with Aaron’s Inc. (NYSE: AAN) unit Progressive Leasing, providing a new financing option for customers. A pilot program with Progressive drove higher customer transactions, Thomas said in a Wednesday note.
The analyst is optimistic about Best Buy’s investment in services as it tries to branch out beyond just selling computers and TVs.
More basic improvements — such as closing underperforming segments, cutting costs and improvements to customer experience — have put Best Buy on “significantly better footing,” Thomas said.
Merchandising trends should help continued growth, he said.
“However, the company continues to face headwinds, including mixed industry growth trends and meaningful competition."
Tigress
Best Buy reported comparable store sales that were significantly higher than Wall Street expected, and is one of a few retailers that can boast of a strong 2018 holiday season, Feinseth said. Customers are trending back into in-store purchasing when it comes to complex computers and electronics because they often need sales help, he said.
Feinseth also likes Best Buy’s adjacent moves, noting that it's smartly positioned as more than a big box electronics store, with an increasing move into technology services. He cited its recent purchase of health care tech service provider GreatCall as an example.
Price Action
Best Buy shares were trading up 0.92 percent at $69.45 at the time of publication Thursday.
Related Links:
Takeaways From This Week's Surprising Retail Earnings
Best Buy Posts Strong Earnings Just In Time For Black Friday: The Sell-Side Reacts
Photo by Tdorante10/Wikimedia.
Latest Ratings for BBY
Mar 2019 | Citigroup | Maintains | Neutral | Neutral |
Feb 2019 | Credit Suisse | Maintains | Neutral | Neutral |
Feb 2019 | Morgan Stanley | Maintains | Equal-Weight | Equal-Weight |
View More Analyst Ratings for BBY
View the Latest Analyst Ratings
See more from Benzinga
© 2019 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
