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

Best Buy Co Inc 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.”

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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.”