For the second quarter ended Aug. 31, the retailer reported earnings of $249.3 million, an 18.4% increase on the year-ago quarter. Sales for the period were 8.9% higher at $2.82 billion compared to the year-ago quarter.
"We are pleased that we've been able to continue our consistent performance in terms of earnings per share growth and overall financial strength," said CEO Steven Temares during a conference call.
Bed Bath & Beyond shares are up 4.92% to $77.88 as of 1:10 p.m. EST. The number of shares traded is well over the stock's one-month average daily volume, with 2.85 million having changed hands compared with 1.66 million. Overall, the company is outpacing the S&P 500, which is up 0.39%.TheStreet Ratings team rates Bed Bath & Beyond as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate Bed Bath & Beyond a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, growth in earnings per share, increase in stock price during the past year, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite its growing revenue, the company underperformed as compared with the industry average of 21.6%. Since the same quarter one year prior, revenues rose by 17.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Bed Bath & Beyond's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, Bed Bath & Beyond increased its bottom line by earning $4.58 vs. $4.08 in the prior year. This year, the market expects an improvement in earnings ($5.01 vs. $4.58).
- BBBY has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Despite the fact that BBBY's debt-to-equity ratio is low, the quick ratio, which is currently 0.53, displays a potential problem in covering short-term cash needs.
- The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- 39.55% is the gross profit margin for Bed Bath & Beyond which we consider to be strong. Regardless of BBBY's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 7.75% trails the industry average.
- You can view the full analysis from the report here: BBBY Ratings Report