Bed Bath & Beyond (NASDAQ: BBBY), a chain that competes with Wal-Mart (NYSE: WMT) and Target (NYSE: TGT), issued Q2 numbers on Wednesday after the conclusion of the regular trading session. Net sales increased over 3%, and earnings per diluted share expanded by 13% to 52 cents. The retailer beat expectations by four pennies, according to the earnings preview.
This is a good showing for the retailer. As we all know, the economy continues to show signs of improvement. At least, that's what the pundits and the headlines have been telling us. An earnings report like this from a retailer does offer some evidence that the worst is behind us.
However, when we get to the same-store sales figure, we see that not everything is perfect. Comps were essentially flat, rising 0.6%. This is an important metric since it focuses on locations that have been around for a while and cuts through the statistical noise caused by new store openings. If I were a shareholder, I would keep a close eye on the comps. Of course, maybe we shouldn't be overly concerned. Back in June, Bed Bath & Beyond saw same-store revenues fell by 1.6%. In April, they were even worse. Perhaps the trend will remain positive.
Bed Bath & Beyond looks like it is improving fundamentally. In terms of technical indicators on the stock, the news is even better. For the most part at least. It's true that the market sold the stock off in yesterday's after-hours session by over 2%. But shares closed at $39.02 during the normal session. While that was down 1%, the price is nevertheless very close to the 52-week high of $40.23.
When I look at the strength of the stock, and when I consider that many weak hands have probably been flushed out, I am compelled to believe that Bed Bath & Beyond is heading higher. Traders might be able to enter a position here, so long as they have an adequate sell order in place to limit losses should they occur.
Disclosure: I don't own any company mentioned; positions can change without notice.
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