Bed Bath & Beyond (BBBY) To Post Q3 Earnings: What's In Store?

Bed Bath & Beyond Inc. (NASDAQ:BBBY) is slated to release third-quarter fiscal 2019 results on Jan 8, 2020. In the last reported quarter, the leading specialty retailer delivered a positive earnings surprise of 30.8%. Moreover, its bottom line beat estimates by 23.7%, on average, over the trailing four quarters.

The Zacks Consensus Estimate for the company’s fiscal third-quarter earnings is pegged at 3 cents, suggesting a decline of 83.3% from the year-ago reported figure. Estimates have been unchanged over the past 30 days. The consensus estimate for fiscal third-quarter sales is pegged at $2,859 million, indicating a 5.7% decline from the prior-year quarter’s reported number.

Key Factors to Note

Bed Bath & Beyond has been battling soft top-line numbers, comparable sales (comps) and margins for the past several quarters. Its top-line performance has mainly been affected by a decline in a number of store transactions. Moreover, soft sales and merchandise margin have been denting its gross margin. This coupled with higher SG&A expenses, as a percentage of sales, has persistently affected its operating margin. In fact, the soft margin trend has also been a hurdle for bottom-line growth.

Nevertheless, the company’s transformation plan appears encouraging. It aims to stabilize top-line growth; reset the cost structure; optimize the asset base with its portfolio of retail banners; and refine the organization structure. Moreover, the company remains focused on expanding, renovating and relocating stores to adapt to the changing market conditions.

Additionally, the Next Generation Lab stores, where Bed Bath & Beyond is testing various experiences and visual merchandising, are expected to have boosted customer experience in the quarter under review. These efforts along with robust sales at the company’s digital business are likely to have partly aided its top and bottom lines in third-quarter fiscal 2019.

Zacks Model

Our proven model does not conclusively predict an earnings beat for Bed Bath & Beyond this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Although Bed Bath & Beyond carries a Zacks Rank #2, its Earnings ESP of 0.00% makes surprise prediction difficult.

Stocks Poised to Beat Earnings Estimates

Here are some companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Boot Barn Holdings, Inc (NYSE:BOOT) has an Earnings ESP of +1.47%. It currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Target Corporation (NYSE:TGT) has an Earnings ESP of +0.24%. It flaunts a Zacks Rank #1 at present.

The Procter & Gamble Company (NYSE:PG) currently has an Earnings ESP of +0.91% and a Zacks Rank #2.

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