Will Bed Bath & Beyond (BBBY) Miss Earnings? - Analyst Blog

Bed Bath & Beyond Inc. BBBY is scheduled to report its fourth-quarter fiscal 2013 results after the market closes on Apr 9. Last quarter, this home-furnishing retailer posted a negative earnings surprise of approximately 2.61%. Let's see how things are shaping up for this announcement.

Growth Factors in the Past Quarter

Bed Bath & Beyond reported dismal third-quarter fiscal 2013 with lower-than-expected top and bottom line results, while it surpassed the prior-year quarter results. The upside in year over year sales was primarily driven by the inclusion of World Market and Linen Holdings, an increase in comparable-store sales (comps) and new store openings. Further, the company lowered its fourth quarter and fiscal year forecasts for almost every component of the income statement.

Moreover, in the beginning of March, Bed Bath & Beyond further lowered its earnings projections for the fourth quarter along with the below-expected preliminary comps results due to the chilly, harsh winter weather that dampened the January and February sales results.

Earnings Whispers?

Our proven model does not conclusively project Bed Bath & Beyond as likely to beat earnings this quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 to surpass earnings estimates. However, this is not the case here due to the following factors:
 
Zacks ESP: ESP for Bed Bath & Beyond is 0.00% since the Most Accurate estimate stands at $1.60 per share, which is in line with the Zacks Consensus Estimate.

Zacks #3 Rank (Hold): Bed Bath & Beyond's Zacks Rank #3 increases the predictive power of ESP. However, we also need to have a positive ESP to be confident of an earnings surprise call. We caution against stocks with a Zacks Rank #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is undergoing negative estimate revisions.

Other Stocks to Consider

Bed Bath & Beyond is not the only firm we are looking up to this earnings season. Our model shows that the following stocks have the right combination to post an earnings beat:

Interactive Brokers Group Inc. IBKR Earnings ESP stands at +13.79% and it carries a Zacks Rank #2 (Buy).

Chipotle Mexican Grill Inc. CMG has an Earnings ESP of +1.06% and a Zacks Rank #3 (Hold).

Zep Inc. ZEP with an Earnings ESP of +11.11% holds a Zacks Rank #3 (Hold).