uploads///BBY EPS Q

What Drove Best Buy’s Strong Earnings Growth in Fiscal Q2 2019?

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Aug. 30 2018, Published 1:50 p.m. ET

Strong earnings growth

Best Buy (BBY) generated adjusted EPS of $0.91 in the fiscal second quarter of 2019, which ended on August 4. The company’s adjusted EPS exceeded analysts’ estimate of $0.83. 

Best Buy’s adjusted EPS rose 31.9% on a year-over-year basis in the fiscal second quarter of 2019.

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Earnings growth drivers

Aside from higher revenue, the increase in the company’s adjusted EPS in the quarter was driven by an $0.08 benefit from a lower adjusted effective income tax rate. The company’s adjusted effective tax rate was 25.4% in the fiscal second quarter of 2019 compared to 32.6% in the fiscal second quarter of 2018.

Best Buy’s EPS growth was also driven by an $0.08 gain from a lower share count due to the impact of share repurchases. The company has repurchased 10.6 million shares worth $774 million year-to-date. Best Buy intends to make share repurchases totaling $1.5 billion in fiscal 2019.

Higher EPS expectations

Best Buy now expects adjusted EPS in the $4.95–$5.10 range in fiscal 2019 (which ends on February 2, 2019), implying a rise of 12%–15%. The company previously expected its fiscal 2019 adjusted EPS to be in the range of $4.80–$5.00. Best Buy’s strong results in the fiscal first half of 2019 aided in the upward revision of its guidance.

The company’s adjusted EPS guidance of $0.79–$0.84 for the fiscal third quarter fell short of analysts’ expectation of $0.92.

We’ll discuss Best Buy’s fiscal second-quarter revenue in detail in the next article.

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