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Bed Bath & Beyond Shares Spike After a Massive Earnings Beat

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Bed Bath & Beyond released its results for the second quarter of fiscal 2020 on Thursday, Oct. 1. The results shattered analysts’ estimates. The company reported revenues of $2.69 billion in the quarter compared to the consensus estimate of $2.60 billion. Bed Bath & Beyond posted an adjusted EPS of $0.50. Analysts expected the company to post an adjusted loss of 23 cents per share. Bed Bath & Beyond's earnings sent its stock price soaring and it opened 22 percent higher than the closing on Sept. 30.

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Bed Bath & Beyond's earnings call

Bed Bath & Beyond held its earnings call for the second quarter of fiscal 2020 at 8:00 a.m. ET on Oct. 1. “Our growth strategy is unlocking improved financial performance, and the marked improvement in our second quarter financial results reflects the potential of our digital-first, omni-always transformation and our efforts to build a modern, durable platform for success,” said CEO Mark Tritton.

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Bed Bath & Beyond's Q2 results

Tritton also said, “We've taken direct action to stabilize our business, including reducing our cost structure, enhancing our financial flexibility, and investing where it matters most to our customers.” Apart from stellar financial results, Bed Bath & Beyond's operating performance was also strong in the second quarter. The company's same-store sales — a key metric in the retail industry — rose 6 percent in the quarter. That’s the first same-store sales growth that the company has posted since the fiscal fourth quarter of 2016.

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Bed Bath & Beyond posted an 89 percent rise in online sales in the second quarter. Online sales have helped retailers beat the lockdown amid the COVID-19 pandemic. Other retailers like Walmart have also reported strong online sales this year. Nike forecasts a permanent shift towards online sales. Amazon has been among the biggest beneficiaries because more consumers have moved to online shopping in 2020.

What is Bed Bath & Beyond's stock price today?

Bed Bath & Beyond stock was trading 23.6 percent higher at $18.5 at 9:40 a.m. ET on Oct. 1. The stock hit its 52-week high of $19.06. Bed Bath & Beyond stock had fallen to a 52-week low of $3.43 in March. U.S. stock markets tumbled amid concerns about the COVID-19 pandemic.

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Should you buy Bed Bath & Beyond stock?

According to consensus estimates compiled by MarketBeat, Bed Bath & Beyond has an average 12-month target price of $11.6, which is a discount of almost 68 percent over the current prices. The high target price for the stock is $24, while the low target price is $3.

Bed Bath & Beyond stock trades at a next 12-month PE ratio of 150x, which looks high. The multiple is above the company's average multiple over the last five years. Bed Bath & Beyond stock looks expensive at these levels.

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