This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

Bed Bath & Beyond Shares Tumble

Bed Bath & Beyond (BBBY) shares tumbled Thursday after the company's second-quarter earnings report raised fears that its growth story is over.

But some analysts say it's too soon to throw in the towel on the leading retailer in the home-furnishing segment.

After the bell on Wednesday, BB&B reported second-quarter net income of $120 million, or 39 cents a share, up from $97.2 million, or 32 cents a share, in the same period last year. Revenue increased 15% to $1.3 billion, up from last year's $1.1 billion.

On the bright side, BB&B continued its streak of never missing Wall Street's earnings estimates through 12 years as a public company.

But it also extended a more recent and troubling trend, which has kept its stock in the basement this year. Second-quarter comparisons cooled, up just 4.8% in the latest quarter compared with 5.9% in the year-ago quarter.

Bed Bath & Beyond's growth is clearly decelerating, which explains its sagging stock price, analysts say. Annual revenue has grown an average of 26% since 1998, but they expect that to slow to 14% over the next five years. That's why the stock is currently trading at just 21 times 2005 earnings, compared with its historical price-to-earnings valuation of nearly 35.

On Thursday, the shares closed down $1.99, or 5%, to $37.59.

Still, Donald Trott, analyst with Jefferies & Co., rejects the idea that the company is running out of room to grow. He noted that specialty stores in the home-goods space, like Bed Bath & Beyond and its closest competitor, Linens N'Things (LIN), now account for about 20% of market share, and that figure has been increasing by about 100 basis points a year. In other markets, specialty stores usually account for between 30% and 40% of market share.

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,810.06 +91.06 0.51%
S&P 500 2,063.50 +10.75 0.52%
NASDAQ 4,712.97 +11.1030 0.24%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs