Can Best Buy continue strong earnings trend?

Best Buy is due to announce its second-quarter results on Tuesday 26 August. Analysts are estimating earnings per share of $0.31 and revenue of $8.98 billion.

A Best Buy store
Source: Bloomberg

Best Buy is trading at $31.33; the stock is up 23% since it reported it first-quarter figures in May, in which the three-month revenue slightly missed expectations but the EPS exceeded estimates. The strong earnings are proof that the chief executive officer Hubert Joly’s turnaround plan is working. Since Mr Joly joined nearly two years ago he has closed underperforming stores, cut the headcount and boosted the cash reserve. In addition to this, the share price has risen 76% during his tenure.

Best Buy’s consumer electronics department business has felt the pinch from its competitors like Amazon and Wal-Mart. The company expects like-for-like sales for electronics to decline in the coming quarter, and traders will be looking for a positive outlook heading into Christmas.

Equity analysts are very bullish on the stock. Out of the 29 recommendations 17 are buys, 11 are holds and only one is a sell.

The stock has bounced off the $29 level a number of occasions. If it takes out $32.24, it could fill the gap up to $36.41.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen. 79% van de retailbeleggers lijdt verlies op de handel in CFD’s met deze aanbieder.
Het is belangrijk dat u goed begrijpt hoe CFD's werken en dat u nagaat of u zich het hoge risico op verlies kunt permitteren.
CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen.