The retail giant, Best Buy (BBY, Financial), which sells almost everything from large home appliances to TVs and computers, is scheduled to post its fourth-quarter earnings of the fiscal year 2015 on March 3 before the market opens. Analysts are speculating about the stock moves and are expecting the company to give a solid performance in the fourth quarter. The analysts are hoping to see a year-over-year rise in earnings per share, and revenue to be in-line with the previous year’s fourth quarter. Let’s dig in further to understand what analysts are predicting for the quarter and how the company performed during the holiday season which could aid in improving its revenue for the quarter.
The analysts have opined…
The Street analysts have estimated that Best Buy would report earnings of $1.35 per share for the fourth quarter on revenue of $14.35 billion. If the retailer is able to match this forecast, it would actually have reported revenue that is 1% below the revenue experienced in the prior year period. Though there are concerns on the revenue coming under pressure in the quarter, the stock has been showing an imploding growth and is up 3.7% over the past three months having traded in a range of $34-$40.
Also it is a notable fact that irrespective of the decline in revenue estimated for the quarter, the earnings are expected to show around 9% growth when compared to the fourth quarter of last year. Three months ago, the Street estimates on earnings stood at $1.30 a share. But based on the optimistic sales of the holiday season the estimates have been upgraded to nearly $1.35 a share. This reflects the optimism held by analysts on the company’s earnings capabilities and the gains it can make during the quarter.
Holiday season sales has picked up pace
Though there were doubts about whether the holiday season served as the boost to the weak revenue stream earned by the company in the past nine months of the fiscal year, such speculation was proved completely wrong by Best Buy on January 15 when it disclosed its comparable store sales figures in domestic and international markets for the last two months of the previous year.
Domestically the comparable store sales were up 2.6% in the nine-week period that ended on January 4. The online sales also picked up momentum and witnessed a 13.4% growth that was attributed to improved traffic and higher conversion rates.
The enterprise revenue in the last two months of the year exhibited an uptick of nearly 2.12% to $11.37 billion from $11.13 billion in the preceding year’s comparable period. This was triggered by the 4.1% growth noticed in the domestic revenue stream which stood at $10.13 billion, up from $9.73 billion reported a year ago. But in the international markets, Best Buy was unable to create a long-lasting impression during the holiday season, and international revenue slumped 11.7% to $1.233 billion from $1.4 billion reported a year earlier.
In spite of the international market’s performance not being up to the mark for this holiday season, it can be easily concluded that the combination of online sales along with aggressive in-store pricing saved Best Buy from the revenue’s greatest downfall, and surely the impact of such progressive strategies opted by the retailer will be felt today when the financial numbers are revealed by the management.
Expectations remain high until the close
With the holiday season numbers being much better than expected, analysts are confident that the Street expectations will be met by Best Buy in the final quarter. Based on such a study, several analysts are expecting investors to hold the stock in the long run. However, today’s earnings release will provide the first hand information on whether the analysts’ expectations have been met or not. So, let’s stay tuned.
