Best Buy Co. Inc. Earnings: Is a Turnaround Coming?

Investors have low expectations for Best Buy's past results, but could growth be right around the corner?

May 20, 2014 at 3:35PM

On Thursday, Best Buy (NYSE:BBY) will release its quarterly report, and shares of the electronics retailer have been under severe pressure all year. After a horrible holiday quarter, Best Buy needs to demonstrate that it can stand up to competition from in the online space as well as Wal-Mart (NYSE:WMT) and other brick-and-mortar retailers. If it can't get profits moving higher in the near future, then Best Buy's turnaround plans could be over before they've truly begun.

Best Buy once seemed like the undisputed champion of the electronics retail space, having bested its chief competitor and moved aggressively forward into the digital age. But even though Best Buy became the biggest player in its niche, companies from outside traditional electronics retail have entered the space and poached a substantial amount of Best Buy's business. Let's take an early look at what's been happening with Best Buy over the past quarter and what we're likely to see in its report.


Stats on Best Buy

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$9.20 billion

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Will Best Buy earnings grow again?
Analysts have slashed their views on Best Buy earnings in recent months, cutting 40% off their first-quarter estimates. The stock has also languished, remaining essentially unchanged since mid-February after huge declines earlier in the year.

Best Buy's fourth-quarter results were a mixed bag for the electronics retailer, as earnings per share easily topped what investors expected from the company. Same-store sales dropped 1.2%, but Best Buy successfully chopped about $765 million in costs from its North American operations. In addition, online sales rose by 20% in the U.S., meeting Amazon on its own turf by ramping up its e-commerce offerings. Overall, with holiday activity involving substantial promotional discounting across the industry, most investors were pleased with Best Buy's results.


Interestingly, Best Buy continues to work on making use of its expansive store locations by creating partnerships with outside providers. SolarCity became the latest company to join the partnership ranks at Best Buy in March, giving the solar giant a chance to showcase its services while giving Best Buy another reason for shoppers to visit its stores.

But Best Buy faces competitive threats on a number of fronts. Wal-Mart has moved aggressively to offer video game trade-ins, going up against Best Buy in an area that initially seemed useful in encouraging shoppers to use store credit for new-game purchases. Yet Best Buy hasn't had the success it had hoped for with its trade-in program, and so it might well benefit from Wal-Mart pushing Best Buy toward other ideas with potentially greater success.

Best Buy is responding to those threats by increasing its use of data analytics. Its Athena initiative will help Best Buy gather and use personal customer information to better tailor marketing campaigns for specific customers. At the same time, ongoing efforts to boost efficiency in logistics and return-management could help it cut costs even further.

In the Best Buy earnings report, watch to see if the company can stop the bleeding on same-store sales and keep its business moving forward. Even with some short-term profit headwinds, Best Buy could well get itself back on track for earnings growth if it can successfully offer a unique shopping experience to its customers.

Warren Buffett just bought nearly 9 million shares of this company
Imagine a company that rents a very specific and valuable piece of machinery for $41,000... per hour (that's almost as much as the average American makes in a year!). And Warren Buffett is so confident in this company's can't-live-without-it business model, he just loaded up on 8.8 million shares. An exclusive, brand-new Motley Fool report details this company that already has over 50% market share. Just click HERE to discover more about this industry-leading stock... and join Buffett in his quest for a veritable landslide of profits!

Click here to add Best Buy to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Dan Caplinger owns shares of SolarCity. The Motley Fool recommends and SolarCity. The Motley Fool owns shares of and SolarCity. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information