Wednesday, March 10, 2010

Best Buy Co. Inc. (NYSE: BBY): Q4 Earnings Preview 2009

Best Buy Co. Inc. (NYSE: BBY), the largest U.S. electronics retailer, is scheduled to release financial results for the fiscal third quarter before the market open on Thursday, March 25, 2010. Analysts, on average, expect the company to report earnings of $1.79 per share on revenue of $16 billion. In the year ago quarter, the company reported earnings of $1.61 per share on revenue of $14.72 billion.

With operations in the United States, Canada, China, Europe and Mexico, Best Buy is a multinational retailer of technology and entertainment products and services with a commitment to growth and innovation. The Best Buy family of brands and partnerships collectively generates more than $45 billion annual revenue and includes brands such as Best Buy, Audiovisions, The Carphone Warehouse, Future Shop, Geek Squad, Jiangsu Five Star, Magnolia Audio Video, Napster, Pacific Sales Kitchen, Bath and Electronic Centers, The Phone House and Speakeasy.

In the preceding third quarter, the Richfield, Minnesota-based retailer reported net earnings of $227 million or $0.53 per share for the third quarter, sharply higher than $52 million or $0.13 per share in the prior-year quarter. Excluding the charge, adjusted net earnings for the quarter surged 51% to $227 million or $0.53 per share from $145 million or $0.35 per share in the year-ago quarter. Quarterly revenue increased 5% to $12.02 billion from $11.50 billion in the same quarter last year. Analysts, on average, expect the company to report earnings of $0.43 per share on revenue of $11.98 billion.

For fiscal 2010, Best Buy anticipates GAAP earnings in a range of $2.94 to $3.09 per share, including first quarter restructuring charges totaling $0.06 per share, up from the prior forecast of $2.64 to $2.94 per share. In December, the company raised its non-GAAP earnings outlook to a range of $3.00 to $3.15 per share from the prior range of $2.70 to $3.00 per share. The company also raised its enterprise revenue expectations for the full-year 2010 to between $49.0 billion and $49.5 billion from the prior forecast in the range of $48.0 billion to $49.0 billion.

The company has benefited from an exceptionally strong holiday season. Its comparable-store sales surged 8.2% during December, topping Wall Street expectations, as holiday shoppers bought products from notebook computers to flat-panel televisions. Analysts had expected, on average, an increase of 5.1%, according to Retail Metrics.

U.S. comparable sales, or those at stores, call centers and Web sites open at least 14 months, rose 9.3%. International same-store sales also rose, up 3.5%. Analysts had expected that sales in the U.S. would rise an average of 7.9% but that overseas results would decline 3.3%, according to Pali Capital analyst Stacey Widlitz.

Total sales in the month ended Jan. 2 rose 13% to $8.5 billion. The company said in January that it's gaining market share.

Recently, Goldman Sachs lowered its target price on shares of Best Buy. The firm sees margins coming in lower than expected which could weigh on earnings. However, few industry watchers contend that fears of margin erosion are largely overblown

The company's stock currently trades at a forward P/E (fye 28-Feb-11 of 11.60 and PEG Ratio (5 yr expected) of0.98. In terms of stock performance, Best Buy shares are up 39% over the past year.

Full Disclosure: None.
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