What's in the Offing for Best Buy (BBY) in Q2 Earnings?

Best Buy Co., Inc. BBY is scheduled to report second-quarter fiscal 2021 results on Aug 25, before the opening bell. The Zacks Consensus Estimate for second-quarter earnings stands at $1.01, suggesting a decline of more than 6% from $1.08 per share earned in the year-ago quarter. However, the current consensus estimate has increased from 78 cents pegged 30 days ago. Moreover, the consensus mark for quarterly revenues is pegged at $9,700 million, indicating an improvement of over 1% from the year-ago quarter’s tally.

Notably, the consumer electronics’ retailer has a trailing four-quarter earnings surprise of 21.6%, on average.

Key Things to Note

Last month, Best Buy issued impressive second-quarter-to-date sales performance for fiscal 2021. Robust consumer demand has been the key sales driver. The company’s sales rose nearly 2.5% year over year for fiscal second quarter-to-date through Jul 18. This comprises sales growth of about 2% domestically and around 8% internationally. During the aforementioned period, online sales leaped 255% with the computing, appliance and tablet categories being leading contributors.

For the period beginning Jun 15, when the company started reopening stores, through Jul 18, sales jumped approximately 15%, with online sales surging 185% in comparison with the year-earlier period. Nearly all of Best Buy’s outlets were open as of Jun 22. Its Building the New Blue initiative is also boding well. Together, these factors might have boosted the company’s overall top line in fiscal second quarter.

However, Best Buy continues to grapple with soft margins for a while. Higher supply-chain costs on increased mix of online revenues have been weighing on margins. During its first-quarter fiscal 2021 earnings call on May 21, management said that online sales will account for a higher portion of total sales in the upcoming results. This will continue to put pressure on gross margin. It had also notified that certain expenses, including store-rent costs, and persistent rate pressure from lower profit-sharing revenues associated with the credit-card arrangement are likely to result in a year-over-year decline in operating margin. Meanwhile, adverse impact of foreign currency translations cannot be ignored.

Best Buy Co., Inc. Price and EPS Surprise

Best Buy Co., Inc. Price and EPS Surprise

Best Buy Co., Inc. price-eps-surprise | Best Buy Co., Inc. Quote

Impressively, the company has a Zacks Rank #2 and an Earnings ESP of +0.95%. If Best Buy tops the earnings estimate in fiscal second quarter, this will mark the 11th consecutive beat for the company.

More Stocks With Favorable Combinations

Here are a few more companies worth considering from the same sector as our model shows that these also have the right combination of elements to beat on earnings:

Dollar General DG presently has an Earnings ESP of +6.88% and a Zacks Rank #2.

Ross Stores ROST currently has an Earnings ESP of +18.26% and a Zacks Rank #3.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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