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Strength Seen in Bed Bath & Beyond (BBBY): Can Its 11.3% Jump Turn into More Strength?

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Bed Bath & Beyond BBBY shares rallied 11.3% in the last trading session to close at $33.29. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 9.7% gain over the past four weeks.

Caught in meme-stock frenzy, Bed Bath & Beyond gave investors strong reasons to cheer about. The company witnessed stellar performance in first-quarter fiscal 2021, wherein both the top and bottom lines improved meaningfully year over year. While net sales surpassed the Zacks Consensus Estimate, earnings per share missed the same. The quarter marked fourth straight comparable sales growth with gross margin surpassing management’s expectations. Impressive results prompted management to raise fiscal 2021 view.

The company delivered adjusted earnings of $0.05 per share that fell short of the Zacks Consensus Estimate of $0.08. Nonetheless, the bottom line improved sharply from an adjusted loss of $1.96 reported in the first quarter of fiscal 2020. Net sales of $1,954 million beat the Zacks Consensus Estimate of $1,873 million, and surged 49% year over year. Markedly, comparable sales increased 86% compared with the year-ago quarter.

Management now envisions fiscal 2021 net sales in the band of $8.2-$8.4 billion up from its prior projection of $8-$8.2 billion. Bed Bath & Beyond now foresees comparable sales rising in the low-single digit range for the remaining three quarters versus previously communicated guidance of flat growth rate. It estimates earnings in the range of $1.40-$1.55 per share.

This home goods retailer is expected to post quarterly earnings of $0.53 per share in its upcoming report, which represents a year-over-year change of +6%. Revenues are expected to be $2.01 billion, down 25.3% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Bed Bath & Beyond, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on BBBY going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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