PreMarket Prep Stock Of The Day: Bed, Bath And Beyond

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

For those who don't have the time to tune in live or listen to the podcast, Benzinga will highlight one stock that merits further discussion. This analysis is not a buy or sell recommendation.

Retailer Bed, Bath and Beyond Inc. BBBY posted a fourth-quarter earnings after the close Wednesday, making it the PreMarket Prep Stock Of The Day.

Bed, Bath And Beyond's Q4 Beat Comes On Lower Expectations

Earnings reports are not going to reflect the full impact of the COVID-19 pandemic for the most part. Although the market began to retreat in late February, full panic did not set in until mid-March, along with quarantines in many states. 

Bed, Bath and Beyond's 17-cent fourth-quarter adjusted EPS beat and its slight sales beat are impressive. One has to wonder how the first quarter of 2020 will look, with many of the retailer's stores closed across the country. The company said fourth-quarter comparable sales decreased 10%. 

Bed, Bath And Beyond's Long-Term Trend Is Not Your Friend

While the long-term uptrend in the broad market ended in February 2020, this issue peaked long in January 2014 at $80.82. Interestingly, this was long before Amazon.com, Inc. AMZN began to seriously wreak havoc on retailers across the world.

Detractors of the company have noted the excessive size of its stores and the confusing layout. An often-heard complaint is that once you enter the store, you are trapped until you walk all around the large footprint.

Bed, Bath And Beyond's 4-For-1 Stock Split

On Feb. 6, the issue had an intraday high of $16.01 and ended the session at $15.62. On Feb. 12, the issue slumped from its previous day close of $14.85 to $11.79, when the company issued a bleak outlook for the quarter. It ended the month at $10.81.

When the broad market got slammed, Bed, Bath and Beyond did as well, but did not bottom until several day later, when it found willing buyers in the $3.50 area from April 1-3.

A brief rally two days later to $6.45 was snuffed out, as it ended Wednesday's session ahead of the quarterly report at $4.44.

Bed, Bath And Beyond Moving Forward

Coming lower expectations for the quarter, the issue was trading higher by 15.65% at $5.14 at the time of publication Thursday afternoon. 

Although this is a significant rally on a percentage basis, the price is still a far cry from Bed, Bath and Beyond's 2014 peak of $80.82.

The COVID-19 crisis isn't coming to an end anytime soon, and it's damaging the retail sector as deeply as any. 

Based on its long-term performance, Bed, Bath and Beyond is certainly not at the top of anyone's list of retail names that will emerge stronger on the other side of the downturn. 

Photo by Anthony929321 via Wikimedia

Posted In: PreMarket PrepretailEarningsLong IdeasNewsTechnicalsOpinionTrading Ideas

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