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Best Buy Rallies Over 22% in a Year on ‘Best Buy 2020′ Plan


Shares of Best Buy Co., Inc. BBY not only gained but have also outperformed the industry and the overall sector in a year’s time. This Zacks Rank #2 (Buy) stock has gained approximately 22.9% compared with the industry’s rise of 16.1% and the overall sector’s growth of 22.7%.

The company remains focused on extensive investments to develop omni-channel capabilities, stores, supply chain, new business initiatives, cost-reduction opportunities and strengthening partnership with vendors. The company continues to invest in areas such as appliances, In-Home Advisor, health space (evident from its acquisition of GreatCall), smart home and Total Tech Support.

Moreover, impressive estimate revisions for the current and next fiscal seem to boost investors’ confidence. Over the past 60 days, the Zacks Consensus Estimate for fiscal 2019 and 2020 has moved up 10 cents and 12 cents to $5.11 and $5.57, respectively.

Best Buy 2020 Plan

Building the New Blue plan was launched in fiscal 2017, post the successful completion of Renew Blue program that was aimed at improving comparable sales and margins. Under the latest strategy, the company will focus on exploring and pursuing growth opportunities, better execution in key areas, cost optimization and investing in people, as well as systems to drive growth, implementation and efficiencies. Moreover, the plan includes initiatives such as expansion of multi-channel retail business, and offering services and solutions that address customer need.

The company expects to achieve $600 million of cost reduction and gross-profit optimization by fiscal 2021 on this plan, of which $305 million has already been accomplished.

Bottom Line

Following its second-quarter results, the company raised the fiscal 2019 projection. For the fiscal, Best Buy anticipates Enterprise revenues of $42.3-$42.7 billion, with comps growth of 3.5-4.5%, up from the prior-year guidance of nearly flat to up 2%.

The company anticipates adjusted operating income rate of about 4.5%, flat with the fiscal 2018 level. Meanwhile, the company expects earnings per share of $4.95-$5.10, reflecting growth of about 12-15% from fiscal 2018.

For the third quarter, management anticipates Enterprise revenues to be $9.4-$9.5 billion and comparable sales to increase 2.5-3.5%. Adjusted earnings are anticipated to be 79-84 cents a share, reflecting an increase of 1-8% year over year. While, domestic comparable sales growth is envisioned between 2.5% and 3.5%, international comparable sales are estimated to be 2-4%.

3 More Retails Stocks to Bank On

Conn’s, Inc. CONN has a long-term earnings growth rate of 23% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Boot Barn Holdings BOOT has a long-term earnings growth rate of 23% and a Zacks Rank #1.

DSW, Inc. DSW has a long-term earnings growth rate of 9% and a Zacks Rank #1.

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