uploads/2017/03/BBY-EPS-4Q17-1.png

How Best Buy’s Fiscal 4Q17 Earnings Beat Analysts’ Expectations

By

Updated

Earnings ahead of estimates

Best Buy (BBY) delivered EPS (earnings per share), excluding one-time items, of $1.95 for fiscal 4Q17. The consumer electronics retailer’s fiscal 4Q17 adjusted EPS was ahead of the consensus Wall Street analyst estimate of $1.67. Best Buy exceeded analysts’ earnings estimates in all the four quarters of fiscal 2017.

Article continues below advertisement

Key drivers

Best Buy’s adjusted EPS rose 27.5% on a year-over-year basis in fiscal 4Q17. This growth in Best Buy’s earnings was attributed to strong expense management and lower tax rates. Higher gross margin and lower-than-expected selling, general, and administrative expenses boosted the company’s bottom line. We’ll discuss the company’s margins in part four of this series.

The lower effective income tax rate benefitted Best Buy’s adjusted EPS by about $0.10. The lower tax rate was a result of the resolution of certain discrete tax matters.

Best Buy’s fiscal 4Q17 adjusted EPS also gained from lower share count resulting from share repurchases. The reduction in net share count benefitted the fiscal 4Q17 adjusted EPS by $0.14 per share. For fiscal 2017, Best Buy’s adjusted EPS grew by 28.1% to $3.56.

Rival GameStop (GME) is expected to announce its 4Q results later this month. Analysts expect the company’s 4Q adjusted EPS to fall 4.9% mainly due to lower sales. Specialty retailer Aaron’s (AAN) delivered a 22% growth in its adjusted EPS driven by the performance of its progressive virtual lease-to-own business.

Outlook

Best Buy expects its adjusted EPS in the $0.35 to $0.40 range for fiscal 1Q18. This guidance was below the analysts’ consensus expectation of $0.49.

We’ll discuss Best Buy’s revenue in the next part of this series.

Advertisement

More From Market Realist