Best Buy Shares Rally After Q2 Earnings Smashes Estimates

  • Best Buy Co Inc BBY reported second-quarter FY22 sales growth of 19.6% year-on-year, to $11.85 billion, beating the analyst consensus of $11.49 billion. Revenue improved 24% compared to the Q2 of FY20.
  • Domestic revenue climbed 20.6% Y/Y, and international revenue rose 7.2%.
  • Enterprise comparable sales increased 19.6%.
  • Gross profit rose 23.8% Y/Y to 2.8 billion, with the margin expanding 80 basis points to 23.7%.
  • Operating income as a percentage of revenue rose 100 basis points to 6.9%. Operating income for the quarter rose 40.3% to $797 million.
  • Non-GAAP EPS of $2.98 beat the analyst consensus of $1.85.
  • Best Buy held $4.3 billion in cash and equivalents as of July 31, 2021.
  • Cash provided by operating activities for the six months totaled $864 million.
  • The company's regular quarterly cash dividend of $0.70 per common share is payable on October 5, 2021, to shareholders of record on September 14, 2021.
  • "Trends have remained strong in August, with sales up approximately 20% for the first three weeks of Q3, as customers demand for products that help them work, learn, cook and entertain from home continues," said CEO Corie Barry in a conference call.
  • Outlook: Best Buy sees Q3 FY22 enterprise revenue of $11.4 billion - $11.6 billion versus the consensus of $10.55 billion. Enterprise comparable sales decline of (1)% to (3)% in Q3.
  • For FY22, the company expects revenue of $51 billion - $52 billion versus the consensus of $49.3 billion.
  • Best Buy also raised Enterprise comparable sales growth for FY22 to 9% - 11% (prior 3% - 6%).
  • Price Action: BBY shares are trading higher by 6.33% at $119.26 on the last check Tuesday.
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