Bed Bath & Beyond (BBBY) investors just can't catch a break.

After years of underperformance, shares hit a four-year high in January -- the result of a rally that looked like a vote of confidence in CEO Mark Tritton's turnaround plan. Then, on April 14, shares tumbled to the tune of 12% in response to its fiscal 2020 fourth-quarter results. The bottom line topped estimates, but sales of $2.62 billion fell just short of expectations and were well below the year-ago figure of $3.11 billion. Shares are down 15% in the past week, taking a bite out of the rebound.

Don't panic. In fact, that recent weakness is ultimately an opportunity to step into an impressive turnaround at a great price. A doubling of the stock's current price in the foreseeable future isn't out of the question.

Woman shopping for kitchenware in a home goods store.

Image source: Getty Images.

Read the fine fiscal print

In simplest terms, not everyone fully appreciates Bed Bath & Beyond's potential. And who could blame them? Revenue growth stalled in 2017, and sales began to outright implode in 2019. Operating income has been steadily dwindling since 2014. Although the company reported adjusted earnings of $0.40 per share for the three-month stretch ended Feb. 27, that's a very slim improvement on the $0.38 per share from the prior-year quarter. And sales? They fell, again, reminiscent of the not-so-distant past.

Take a closer look at Bed Bath & Beyond's fiscal fourth-quarter numbers, though. The absolute decline in sales stems from recent divestitures of revenue-bearing brands like January's sale of Cost Plus World Market, and November's completed sale of Christmas Tree Shops and Linen Holdings. It shed website in August. The company has also been closing stores, culling revenue in the process.

The good news? Same-store sales -- sales produced by stores that have been open for at least one year -- were up 4% in the quarter, signaling that what the company is doing on the front lines of the brick-and-mortar war is working. Underscoring this progress is the fact this was the third consecutive quarter same-store sales and earnings growth.

The retailer is doing more with less.

Doing things differently

As impressive as this progress may be, even more overlooked is how most of the turnaround plan has yet to be enacted.

Case in point: its private-label programs. Bed Bath & Beyond said in March that it plans to launch at least eight new in-house brands before the end of the year, though to date only two (Nestwell and Home, Happier) have debuted. More are coming. Private-label goods are important to retailers not only because they're generally more profitable than nationally-branded products but because they can fill product gaps in retailers' inventories.

Tritton's turnaround plan is more than just an update to its merchandising mix, however. There's much going on that consumers will never see, yet will sense. Last month, the company selected RELEX Solutions to update its inventory management systems, which add predictive elements to the retailers' product procurement.

In February, Bed Bath & Beyond also announced it was tapping software giant Oracle as a resource planning technology provider, which will help with (among other things) strategic planning and supply chain management.

These and other initiatives have yet to have a decisive effect, but it's coming. Even analysts agree the company is on the right track. It's just going to take another year to get to its desired destination.

A bigger-picture bargain

Still, we should see hints of the turnaround this year.

As of the latest consensus, analysts are calling for a profit of around $1.34 per share for the 12 months ending in Feb. 2022, reversing last year's loss of $0.98. But it's difficult to determine how much of that progress is just the result of coming out of a pandemic funk and how much is a reflection of the new-and-improved Bed Bath & Beyond. Sales will actually decline this year.

Look further down the road, though, to fiscal 2022's consensus forecasts. Analysts are calling for per-share profits of $2.03 that year and modeling additional growth in the years that follow. That's when all of the home-goods retailer's new growth initiatives should be fully under way, and when -- hopefully -- the pandemic is completely in the rearview mirror.

Bed Bath & Beyond's profits are expected to rebound through 2025 even without a significant sales growth.

Data source: Thomson Reuters. Chart by author.

At the expected earnings of $2.03 per share, this stock trades at a very palatable forward price-to-earnings (P/E) ratio of 12.6.

Worth the wait

Many investors don't see or believe in the looming turnaround -- they'd argue Bed Bath & Beyond just can't compete in a home goods retailing environment that includes Amazon.

That's the old Bed Bath & Beyond, though. Aside from the modernization and merchandising initiatives the retailer is taking on, all of them are taking shape under an "omni-always" umbrella ... a paradigm that positions Bed Bath & Beyond as a lifestyle choice rather than a mere retailer.

It's a multi-year task, to be sure. But for patient investors, the turnaround is savvy and on track, setting the stage for the stock to at least double from its recent sell-off.