Will BBBY’s 2Q17 EPS Outperform Analysts’ Estimates?
2Q17 EPS estimates
In 2Q17, analysts are expecting Bed Bath & Beyond (BBBY) to post EPS (earnings per share) of $0.95, which represents a fall of 14.4% from $1.11 in 2Q16.
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Analysts are expecting the decline in BBBY’s net margin to offset the positive effects of revenue growth and share repurchases and lower the company’s EPS. Since the beginning of 3Q16 until the end of 1Q17, the company has repurchased 9.1 million shares for $374.8 million. At the end of 1Q17, the company had $1.6 billion under its share repurchase program. Share repurchases will increase the company’s EPS by lowering the number of shares outstanding.
From the above graph, we can see that BBBY’s EPS has outperformed analysts’ estimates only once in the last five quarters. When this happens, the stock price tends to rise.
Peer comparisons and outlook
For the next four quarters, analysts are expecting BBBY to post EPS of $4.05, which represents a fall of 7.5% from $4.38 in the corresponding four quarters of the previous year. The decline in net margin and revenue is expected to offset the positive effects of share repurchases to lower its EPS.
In 1Q17, the company had paid dividends of $0.15 per share at a dividend yield of 2.1% and a payout ratio of 14.9%. For the next three quarters, analysts are expecting the company to pay dividends of $0.15 in each of the quarters to take the total to $0.60 for 2017, which represents year-over-year growth of 20% from $0.50 in 2016.
Next, we’ll look at BBBY’s valuation multiple.