Shares of Best Buy (
) are underperforming the broader stock market Monday afternoon as
traders are placing their bets ahead of the company's first-quarter
earnings report Tuesday morning. While the stock is hanging onto
positive territory (up about 0.2 percent), the Dow is up about 1
percent and the S&P 500 is up 1.5 percent.
Analysts are looking for the electronics retailer to issue
quarterly earnings of about 60 cents per share on sales of $11.5
billion. During the same quarter last year, Best Buy reported
first-quarter earnings of 34 cents per share on sales of $10.94
Best Buy's reported earnings beat Wall Street expectations by about
14 percent during the last quarter of FY12, and missed by about 8
percent and 11 percent during last year's third quarter and second
Notably, Best Buy is currently struggling to find a new CEO. On
April 10th, Brian Dunn resigned from his position. While the stock
traded higher on that day following the news, Best Buy shares have
traded down about 18 percent since.
Analysts are largely waiting on the sidelines ahead of the earnings
report. Data from our
portal shows four firms with a Buy on the stock, 14 with a Hold,
and two suggesting to sell the stock.
- Will be looking: 1. for comps to remain negative, 2. gross
margin around 24.9 percent and operating margin around 3.2
percent, 3. unchanged guidance, 4. an update on the CEO
situation, 5. unilateral pricing which should start to show up,
and 6. an update on store footprint plans.
Maintains Hold rating and $25 price target on Best Buy.
- Expecting "negative comps and depressed margins, exacerbated by
management turmoil." Modeling for EPS of 49 cents on sales of
$10.9 billion. Sees comps down about 4.1 percent. Wedbush is
anticipating a downside trend in international same-store sales
to accelerate. Related to a continued move lower in margins, the
firm cited a shifting mix of products and promotions.
"We believe Best Buy store traffic is driven by Consumer
Electronics, and think that the company's focus on its growth
segments (primarily Computing and Mobile Phones) may yield lower
than expected results if store traffic continues to slow. We
expect the next major product upgrade cycle for CE devices to be
at least a few years away, and Best Buy's stubborn pricing for
itesm that are increasingly viewed as commodities could serve to
further alienate customers."
Maintains Neutral, $23 target.
Best Buy generally reports right at 8am ET. Stay tuned to our
category for all the latest news.