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Why Bed Bath & Beyond Stock Fell after Its 2Q17 Earnings

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2Q17 performance

Bed Bath & Beyond (BBBY) announced its 2Q17 earnings on September 19, 2017. The company posted adjusted EPS (earnings per share) of $0.77 on revenues of ~$2.9 billion. Compared to 2Q16, the company’s EPS fell 30.6%, while its revenues declined 1.7%.

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Stock performance

Analysts expected Bed Bath & Beyond to post EPS of $0.95 on revenues of ~$3.0 billion. Also, the company’s 2Q17 SSSG (same-store sales growth) of -2.7% missed the analyst estimate of -0.7%. Looking at a challenging environment, Bed Bath & Beyond’s management has set its 2017 EPS guidance at $3.0, which represents a decline of 34.8% from $4.60 in 2016. 

The lower-than-expected 2Q17 earnings and the weak outlook appears to have made investors skeptical of Bed Bath & Beyond’s future earnings, leading to a fall in its stock price. On September 21, 2017, Bed Bath & Beyond was trading at $22.15, which represents a fall of 17.7% since the announcement of its 2Q17 earnings.

Year-to-date performance

Since the beginning of 2017, Bed Bath & Beyond stock has fallen 45.3% since the beginning of 2017. During the same period, its peers Home Depot (HD), Lowe’s (LOW), and Williams-Sonoma (WSM) have returned 18.7%, 9.7%, and -3.7%, respectively.

The S&P 500 Index (SPX) and the Consumer Discretionary Select Sector SPDR ETF (XLY) have returned 11.7% and 9.8%, respectively, during the same period.

Series overview

In this series, we’ll look at Bed Bath & Beyond’s 2Q17 revenues, margins, and earnings per share. We’ll also cover its management guidance for 2017 and the analysts’ estimates for the next four quarters. Finally, we’ll look at the company’s valuation multiple and analysts’ recommendations.

First, let’s start by looking at Bed Bath & Beyond’s 2Q17 revenues.

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