Can BBBY Stock Rebound After A 13% Drop?

by Trefis Team
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Trefis
BBBY
Bed Bath & Beyond
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Bed Bath & Beyond’s stock (NASDAQ: BBBY), a home goods retailer, has declined 13% in the last month (twenty-one trading days) to levels of near $24 currently. But will the company’s stock see higher levels over the coming weeks, or is a decline in the stock imminent? According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price, returns for BBBY stock average around 2.3% in the next one-month (twenty-one trading days) period after experiencing a fall of 5.4% during the last week. But how would these numbers change if you are interested in holding BBBY stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis machine learning engine BBBY stock chances of a rise. You can see the chance of recovery over different time intervals of a quarter, month, or even just one day!

During the first quarter of 2021 (ended May 29), Bed Bath & Beyond’s revenue grew by a strong 49% year-over-year (y-o-y) to $1.95 billion, due to sustained consumer interest across its bedding, bath, indoor decor, kitchen food prep, and home decoration products. While Bed Bath’s Q1 comparable sales growth of 86% saw an easy comparison y-o-y, this metric was up 3% in comparison to Q1 of 2019. The buybuy BABY banner continued to deliver positive sales growth with sales increasing more than 20%, led by 50% growth in its digital channel. In fact, BBBY is investing heavily in e-commerce and saw more than 38% of its total sales come from online orders in Q1. Having said that, the company also partnered with food delivery platform DoorDash to offer same-day delivery on store items across the U.S. and Canada. The retailer is focused on its core businesses after having shed Christmas Tree Shops and World Market Stores as a part of its restructuring plan. While the company still has a long way to go before it can claim to be on a sustainable growth plan, it continues to take baby steps forward.

Looking ahead, BBBY raised its comparable sales expectations for the coming quarters to the low single-digit growth range compared to prior guidance for flat comparable sales growth. In addition, it anticipates sales to range between $8.2 billion to $8.4 billion for the full year vs a prior range forecast of $8 billion to $8.4 billion.

MACHINE LEARNING ENGINE – try it yourself:

IF BBBY stock moved by -5% over five trading days, THEN over the next twenty-one trading days, BBBY stock moves an average of 2.3%, with a 47% probability of a positive return over this period.

Some Fun Scenarios, FAQs & Making Sense of BBBY Stock Movements:

Question 1: Is the average return for BBBY stock higher after a drop?

Answer: Consider two situations,

Case 1: BBBY stock drops by -5% or more in a week

Case 2: BBBY stock rises by 5% or more in a week

Is the average return for BBBY stock higher over the subsequent month after Case 1 or Case 2?

BBBY stock fares better after Case 2, with an average return of 2.3% over the next month (twenty-one trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 3.2% for Case 2.

In comparison, the S&P 500 has an average return of 3.1% over the next twenty-one trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.

Try the Trefis machine learning engine above to see for yourself how BBBY stock is likely to behave after any specific gain or loss over a period.

Question 2: Does patience pay?

Answer: If you buy and hold Bed Bath & Beyond stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.

Overall, according to data and the Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!

For BBBY stock, the returns over the next N days after a -5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:

You can try the engine to see what this table looks like for BBBY stock after a larger loss over the last week, month, or quarter.

Question 3: What about the average return after a rise if you wait for a while?

Answer:

The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks – although BBBY stock appears to be an exception to this general observation.

BBBY’s returns over the next N days after a 5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:

It’s pretty powerful to test the trend for yourself for BBBY’s stock by changing the inputs in the charts above.

E-commerce is eating into retail sales, but this might be an investment opportunity. See our theme on E-commerce Stocks for a diverse list of companies that stand to benefit from the big shift.
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