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Bed Bath & Beyond Beats Wall Street Estimates; Stock Down on Poor Guidance
12/19/2012 6:18:00 PM
Home goods retailer Bed Bath & Beyond (NASDAQ: BBBY ) released its fiscal third-quarter earnings results on Wednesday. In late trading, the stock was down around four percent to $58.01. Earnings per share at Bed Bath & Beyond came in slightly ahead of Wall Street estimates, but the company's revenues came up light. Looking ahead, BBBY also provided earnings guidance which was below current Street consensus.
The stock has been volatile in 2012, posting a number of sharp declines. The first big pullback in the name occurred in late June after the company provided poor guidance. After rallying back throughout the rest of the Summer, shares fell again in mid-September on earnings and guidance news.
Despite the disappointments, BBBY closed Wednesday's trading session with a gain of roughly four percent on the year, although that may be wiped out on Thursday. Despite hovering around positive territory in 2012, the stock has underperformed the S&P 500 which is up around 14 percent on the year by a fairly wide margin.
For the third quarter, the company reported net income of $232.8 million or $1.03 per share, compared to $228.5 million or $0.95 per share, in last year's corresponding quarter. This beat Wall Street analysts' consensus EPS estimates of $1.02 by a penny. Sales in the period were up 15 percent to $2.70 billion from $2.34 billion in last year's third quarter. This missed consensus revenue estimates of $2.73 billion by $30 million.
Looking ahead, Bed Bath & Beyond said that it expects fourth-quarter earnings per share to be between $1.60 and $1.67. For fiscal 2012, the company reiterated its guidance of $4.48 to $4.54 per share. Both of these projections are below current consensus estimates.
For the fourth-quarter, analysts are modeling earnings per share for Bed Bath & Beyond of $1.75, which is $0.08 above the high end of the company's range and $0.15 above the low end. For fiscal 2012, analysts have consensus estimates of $4.62, which is $0.08 above the high end of the company's provided guidance range and $0.14 above the low end.
In light of the updated projections from Bed Bath & Beyond, it is likely that Wall Street analysts will lower their estimates for the company for both the fourth-quarter and the full-year. As a result, the stock may be under further pressure on Thursday.
On a longer-term basis, BBBY has been an excellent investment. Over the last 5 years, the stock price has more than doubled and sales, net income, and margins continue to rise. Bed Bath & Beyond has proven to be a very high quality retailer and investors may want to look for entry points on a pull back in the coming days.
In the wake of the company's earnings results it appears that the shares will once again fall below the $60.00 level. The next logical support area for the stock may be at its 52-week low which is not far away at $55.58. It is also possible, however, that Bed Bath & Beyond will hold the $60.00 level and rally in the coming days despite the company's poor guidance. It would be a particularly bullish signal if the market looked past the weak guidance and pushed the stock higher.
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