Best Buy (BBY) Stock Soars on 2Q Earnings Results
Shares of Best Buy Co. (BBY) were trading up +3.93 or +13.43 percent in Tuesday's premarket after the company released better than expected results for its second quarter early this morning. Best Buy stock closed at $29.27 per share, down -0.91 or -3.02 percent in Monday's regular trading session.
Best Buy reported it had earned $0.49 per adjusted diluted share for the second quarter of its fiscal year 2016 compared to earnings of $0.42 per share in the same period one year ago. Revenue for the quarter was $8.53 billion versus $8.46 billion last year. The analyst consensus for earnings was $0.34 on revenue of $8.29 billion.
Enterprise revenue increased +0.8 percent to $8.5 million due to a +3.9 percent increase in domestic sales of $7.9 billion, which was partially offset by 120 basis point for currency exchange and the impact of consolidating the company's Canadian brand. Best Buy comparable store sales increased +2.7 percent driven by strong domestic demand for large screen televisions, mobile phones and other major appliances. Nevertheless, the increase was partially offset by a decline in tablet sales.
Hubert Joly, Best Buy Chairman and Chief Executive Officer said in the company's press release that, "We believe these better-than-expected second quarter results are affirmation that our strategy of offering advice, service and convenience at competitive prices is paying off." He continued saying, "As we look forward, while we are cognizant of the recent financial market turbulence, we believe the combination of an opportunity-rich environment and the strength of our competitive advantages leads us to have a positive outlook about our future prospects, starting with the important back-to-school third quarter."
While the company reported excellent results for the United States, International revenue declined by -25.6 percent compared to last year. Best Buy attributed the decline to revenue loss as a result of closed stores as part of Canadian brand consolidation, a 1,200 basis point impact due to negative foreign currency factors and lower demand for consumer electronics in Canada.
For the full year, assuming continued strength domestically offset by near term impacts from Canada, the company expects flat to negative low single digit revenue growth in the United States with operating income to be flat. Internationally, due to the Canadian consolidation, the company expects a revenue decline of -30 percent and an International non GAAP operating income rate of a negative -2.5 percent to a negative -3.5 percent.
Best Buy stock has been under considerable pressure, down -20 percent year to date, nevertheless, the company is making a significant turnaround with better than expected results in the last two quarters. The stock was trading just above its yearly low before the earnings release this morning.
Other News About BBY
Best Buy Launches Geek Squad Academy Nationwide
Classes to be given at Best Buy stores include digital music, robotics and 3D printing.
Moody's Boosts Best Buy to Baa1
Rating on electronics giant is now one notch under an A.
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