(BBBY) Bed Bath & Beyond First Quarter 2011 Earnings Preview

Bed Bath & Beyond Inc. (BBBY) is scheduled to release its first-quarter 2011 results on Wednesday, June 22, 2011. The Zacks Consensus Estimate is pegged at 62 cents a share for the first quarter of fiscal 2011. This portends a year-over-year estimated decline of a stinging 19.2%.

Fourth Quarter Performance

The company’s fourth quarter earnings rose 30.2% to $1.12 per share from the year-ago earnings of 86 cents per share, handily surpassing its earnings guidance range of 91 cents to 95 cents per share. Bed Bath & Beyond also outpaced the Zacks Consensus Estimate of 97 cents a share. The company has reported eight consecutive quarters of improving trends.

Bed Bath & Beyond’s fourth-quarter top line jumped 11.6% to $2,505.0 million from $2,244.0 million in the year-ago quarter. The company has been witnessing increasing trends in comparable-store sales.

After falling 0.6% in the second quarter of fiscal 2009, comparable-store sales were positive in the subsequent quarters. In the quarter under review, comparable-store sales climbed 8.5%. The company also beat the Zacks Consensus Estimate of $2,387.0 million.

Agreement of Analysts

Over the last 30 days, one analyst out of 21 moved its estimate in the upward direction with no movement in the opposite direction for the first quarter of fiscal 2011. The estimate for fiscal 2011 follows the same trend over the last 30 days.

In the last 7 days, 1 of 21 analysts has moved its estimate in the upward direction, with no downward movement by any analyst for the first quarter of fiscal 2011 and fiscal 2011.

Magnitude of Estimate Revisions

With no real effect from estimate revisions by analysts for Bed Bath & Beyondfor the upcoming quarter and fiscal 2011, the estimates have hit a plateau at 62 cents a share and $3.53 per share, respectively.

Earnings Surprise

Considering earnings surprises, the stock has been steady over the last four quarters, with positive surprises ranging between a low of 8.3% and a high of 15.5%. The average remained positive at 11.8%.

Our Recommendation

Currently, Bed Bath & Beyond holds a Zacks #2 Rank, implying a short-term ‘Buy’ rating on the stock. However, in the long term, we have a ‘Neutral’ recommendation on the stock.

Bed Bath & Beyond represents a strong brand with solid growth opportunities. Industry consolidation, cross merchandising opportunities, future growth potential for newer concepts, and strong balance sheet and cash flow should continue to augur well for the company. Further, Bed Bath & Beyond is well positioned to benefit from recent positive housing turnover trends, which should support sales for home furnishing retailers in fiscal 2011.

Bed Bath & Beyond however operates in a highly fragmented industry and faces competition from larger retailers, such as Target Corporation (TGT) and Wal-Mart Stores Inc. (WMT) as well as from departmental and specialty stores. Despite its strong fundamentals, Bed Bath may find it difficult to execute and implement new business strategies which, in turn, will impact its operations adversely.

BED BATH&BEYOND (BBBY): Free Stock Analysis Report

TARGET CORP (TGT): Free Stock Analysis Report

WAL-MART STORES (WMT): Free Stock Analysis Report

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