What To Expect From Best Buy’s Q3

by Trefis Team
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Best Buy
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Best Buy (NYSE:BBY) is scheduled to announce its fiscal third quarter results on Thursday, November 16. The company started the year on a strong note, beating earnings per share estimates and revenue estimates in both quarters. In Q2, Best Buy’s revenue grew 5% year-over-year (y-o-y) to around $ 8.9 billion, primarily due to an enterprise comparable sales increase of 5.4%. This growth was driven by stronger consumer demand across most categories, particularly computing, wearables, mobile, gaming, and tablets. The retailer reported higher-than-expected non-GAAP EPS of $0.69, up 21% y-o-y, primarily driven by a lower than expected non-GAAP effective income tax rate and a higher domestic revenue.

Our $56 price estimate for Best Buy’s stock is slightly below the current market price.

In September, Best Buy announced its plans to significantly expand its same-day delivery service from 13 metro areas to 27, with plans to reach 40 markets by the holiday shopping season. This service will allow customers to purchase certain items online and receive them just hours later, with the help of third-party providers. In addition, the company also lowered the price for the service from $14.99 to $5.99, in order to offer further incentives to customers to use the service going forward.

For the third quarter, Best Buy expects its sales to benefit from the positive category momentum from the first half of the year. As a result, the company expects its total revenue to be in the range of $9.3-9.4 billion in the third quarter. It also expects domestic comparable sales growth in the range of 4.5% to 5.5%, and adjusted earnings per diluted share of $0.75 to $0.80 for the company.

For the full year fiscal 2018, the company raised its guidance to reflect the better-than-expected first-half results, and now expects revenue growth of approximately 4% compared to the prior outlook of approximately 2.5%. It also expects full year non-GAAP operating income growth of 4% to 9% versus its original outlook of 3.5% to 8.5% growth.

Have more questions about Best Buy? Please refer to our complete analysis for Best Buy 

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