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Bed Bath & Beyond Q1 Earnings Preview: Will Earnings Go Beyond Expectations?

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Housing retailer Bed Bath & Beyond (NASDAQ: BBBY) reports its first quarter 2014 sales and earnings Wednesday after the closing bell.

Consensus estimate Bed Bath & Beyond's EPS to be $0.95 for its Q1 results. The stock has been under heavy pressure since the retailer's last report on April 9; shares are down nearly 12 percent over the last several months and has missed its consensus expectations in EPS for the past two quarters.

For the most-recent quarter, analysts are expecting EPS of $0.01 on sales of $2.2 billion. This would represent a 22 percent decline on a year-over-year basis for earnings and a 10 percent gain for sales.

In a report released Monday, Morgan Stanley analyst Simeon Gutman initiated coverage on Bed Bath & Beyond with an Underweight rating and a $63 price target, seeing some optimism in the near term.

Capital IQ projects Bed Bath & Beyond sales to increase 5.4 percent by FY 2014 and a 3.9 percent increase in FY 2015. In addition to Bed Bath & Beyond's projected 30 new stores in 2014, Levy estimates the retailers same-store sales to grow by nearly three percent in the quarter. Levy expects Cost Plus and Linen Holdings acquisitions to contribute to Bed Bath & Beyond's sales.


In recent quarters consumer discretionary income has been downward trending. Talks of inflation have been happening in most recent conference calls (not just in home furnishing). The housing market has been picking up, with New Home Sales increasing by nearly 18 percent, and should be a positive sign for Bed Bath & Beyond.

The most recent company to report in the home furnishing sector was Pier 1 Imports (NYSE: PIR) who missed consensus expectations, but this is not a good indicator for Bed Bath & Beyond because Pier 1 has been underperforming for quite sometime, while Bed Bath & Beyond is one of its sectors leaders.

Bed Bath & Beyond shares closed Tuesday down 0.56 percent at $60.64.

Posted-In: Earnings News Guidance Previews Trading Ideas


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