Market Overview

UBS Retail Analyst: Best Buy's Combination Of Top, Bottom Line Will Lead To Outperformance

Share:
Related BBY
Study: Top Retailers Will Lose $5.4 Billion In Mobile Revenue This Holiday Season
The State Of Music In 2016: Vinyl Vs. Digital
Best Buy: The Gift That Keeps On Giving (Seeking Alpha)

Best Buy Co Inc (NYSE: BBY) declared its fourth-quarter earnings on Tuesday, which were better than analysts' expectations. Adjusted EPS from continuing operations came at $1.48, compared to $1.20 reported in the same quarter last year. The company also announced its first stock buyback since 2012.

Michael Lasser, UBS Retail analyst, was on CNBC Tuesday to weigh in on the company's numbers.

Balancing Attributes

“I thought there were two notable points from the quarter,“ Lasser said.

“Number one was the cash return [...] They [Best Buy] are doing it through a combination of a $0.51 special dividend. They are going to buy back a billion dollars of stock over the next three years. And they increased the dividend by just over 20 percent. So that's all good news.”

Continuing, Lasser said, “They also told us that while they do expect their margin to be down anywhere from 30 to 50 basis points in the first half of the year, most of that is going to come from […] investments, which should be a good news, because this suggests their gross margin is starting to balance out.”

Related Link: JPMorgan: Best Buy Beat Is "Positive" For Corning

Lasser remarked that although those are good points “However, stock had a run and it's still a very competitive business.

“So, we think that some of those favorable attributes are balanced with the fiercely competitive nature of consumer electronics.”

A Suitable Combination

On being asked where the growth from Best Buy will come from here on out, Lasser replied, “What will lead to better performance for the stock is a suitable combination of both top-line and bottom-line.”

Latest Ratings for BBY

DateFirmActionFromTo
Dec 2016Loop CapitalInitiates Coverage OnBuy
Nov 2016Bank of AmericaUpgradesUnderperformNeutral
Nov 2016Evercore ISI GroupDowngradesHoldSell

View More Analyst Ratings for BBY
View the Latest Analyst Ratings

Posted-In: Michael Lasser UBSAnalyst Color CNBC Analyst Ratings Media

 

Related Articles (BBY)

View Comments and Join the Discussion!