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Why Bed Bath & Beyond Missed Analysts’ Estimates in 2Q17

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Part 6
Why Bed Bath & Beyond Missed Analysts’ Estimates in 2Q17 PART 6 OF 8

Bed Bath & Beyond’s Earnings Missed Analysts’ Estimates in 2Q17

2Q17 EPS

In 2Q17, Bed Bath & Beyond (BBBY) posted EPS (earnings per share) of $0.67. Its adjusted EPS, removing one-time expenses, stood at $0.77, which represents a fall of 30.6% from $1.11 in 2Q16. Analysts had forecast the company to post EPS of $0.96.

Bed Bath &amp; Beyond’s Earnings Missed Analysts’ Estimates in 2Q17

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EPS declined

The decline in revenues and contractions of net margins led Bed Bath & Beyond’s EPS to fall in 2Q17. However, some of the declines were offset by share repurchases. The company has repurchased 10.9 million shares in the last four quarters for $430.8 million. 

By the end of 2Q17, the company had $1.6 billion under its share repurchase program. Share repurchases boost the company’s earnings by lowering the number of outstanding shares.

From the above graph, we can see that the company’s EPS has outperformed analyst estimates only once in the last five quarters.

Peer comparisons and outlook

During the same period, Home Depot (HD), Lowe’s (LOW), and Williams-Sonoma (WSM) posted EPS growth of 14.2%, 14.6%, and 5.2%, respectively.

For 2017, the company’s management set the company’s EPS guidance at $3.0, which represents a fall of 34.8% from $4.60 in 2016. For the next four quarters, analysts expect Bed Bath & Beyond to post EPS of $2.94, which represents a fall of 27.2% from $4.04 in the corresponding four quarters of the previous year.

Dividends

On September 19, 2017, Bed Bath & Beyond’s management announced a dividend per share of $0.15, which is scheduled to be paid on January 16, 2018. The company has paid dividends at a yield of 2.7% and a payout ratio of 20.0%. 

For the next two quarters, analysts expecting the company to pay dividends of $0.15 in each quarter to take the total for 2017 to $0.60, which represents growth of 14.3% from $0.53.

Next, we’ll look at Bed Bath & Beyond’s valuation multiple.

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