Will Best Buy (BBY) Keep the Earnings Streak Alive? - Analyst Blog

We expect consumer electronics giant The Best Buy Co., Inc. BBY to beat expectations when it reports first quarter fiscal 2015 results scheduled for release on May 22, 2014.

Why a Likely Positive Surprise?

Our proven model shows that Best Buy may beat earnings because it has the right combination of two key components.

Positive Zacks ESP: Best Buy currently has an Earnings ESP of +10.53%. This is because the Most Accurate estimate stands at 21 cents per share, while the Zacks Consensus Estimate is pegged at 19 cents.

Zacks #3 Rank (Hold): Note that stocks with a Zacks Rank #1, 2 and 3 have a higher chance of beating earnings. The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.

The combination of Best Buy's Zacks Rank #3 and Earnings ESP of +10.53% makes us confident of a positive earnings beat on May 22.

What is Driving Better-than-Expected Earnings?

Best Buy is a leading player in the consumer electronics arena. With changing customer preferences, the company is constantly improving its online portal to increase sales. The success of these efforts is evident from the sturdy online sales — a key highlight of its performance. Best Buy continues to focus on developing its e-commerce/omni-channel capabilities going forward.

Moreover, in order to gain additional revenue, the company has partnered with vendors to increase the number of stores under the profitable “store-within-a-store” strategy. To rein in escalating costs, the company has reinforced a powerful turnaround strategy called the “Renew Blue” program.

Best Buy has a trailing four-quarter average positive surprise of 70.3%. In the last concluded quarter, the company outdid the Zacks Consensus Estimate by 22.8%.

Other Stocks to Consider

Best Buy is not the only firm looking up this earnings season. The following companies are also likely to beat earnings in the to-be-reported quarter

The Gap, Inc. GPS with an Earnings ESP of +1.79% holds a Zacks Rank #3

L Brands, Inc. LB has an Earnings ESP of +1.96% and a Zacks Rank #3.

Lions Gate Entertainment Corp. LGF has an Earnings ESP of +7.69% and a Zacks Rank #3.