Bed Bath & Beyond (NASDAQ: BBBY), whose colleagues include Wal-Mart (NYSE: WMT) and Target (NYSE: TGT), will be reporting earnings for the fourth quarter on Tuesday, April 7. Now, the market isn't expecting any earnings growth. In fact, according to this source, the decline could be as severe as 33% if the retailer matches expectations and delivers $0.44 per share.
The good news, though, is that Bed Bath & Beyond actually has a decent history in terms of beating Wall Street expectations. If that holds, then investors might be pleasantly surprised when Q4 numbers are issued. When I wrote about the retailer's last earnings release, I was pretty bearish. And I was very wrong. I questioned why the stock should be purchased. Well, the stock has been doing well as of late, and is up on the year-to-date frame as of this writing. A commenter named Rich set me straight and rightfully proposed that the liquidation of a competitor might have temporarily dampened things; once the competitor was gone, he said, Bed Bath & Beyond might prosper.
Well, we'll see exactly how much prospering Bed Bath & Beyond has achieved, but I have to tip my hat to Rich and say that the market apparently agreed with him. If you had ignored my reservations and had traded the company's stock, you might be in the green right now. And if that's the case, congratulations.
So, although I might say that Bed Bath & Beyond has a decent chance of beating estimates, I'll also state that I have no intention of buying ahead of earnings on this one. After such a run-up, it's possible that the stock could be getting frothy on a short-term basis. But, hey, I was wrong before, so certainly do your own research.
I'll be interested most in the company's same-store sales to see how customer traffic and the consumer's willingness to spend are faring, but mostly, I'll be watching the stock. We're in a very interesting time. Is the rally for real? Can you buy equities with impunity? In other words, has all the bad stuff already been discounted? Some retail stocks seem to suggest as much.
As for me, I'm still on the cautious side. That's why I'm really interested in the market's reaction to Bed Bath & Beyond. If the company only reports a so-so quarter in terms of expectations, maybe meeting or missing by a penny, and then rallies, then it might be very telling. Remember, though, you don't need to be a hero as they say and trade ahead of any earnings report. You can always study the price action after the news is out.
Disclosure: I don't own any company mentioned; positions can change without notice.
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