Best Buy Co Inc (NYSE: BBY) stock jumped as much as 4.6 percent in pre-market trading on Thursday after the company reported a big fourth-quarter earnings beat and blew same-store sales expectations out of the water.
Best Buy reported adjusted fourth-quarter earnings per share of $2.42 on revenue of $15.36 billion. Both numbers topped consensus analyst estimates of $2.04 and $14.5 billion, respectively.
However, the most impressive fourth-quarter number was same store sales growth, which surged 9 percent. Actual growth was more than three times the 2.9 percent growth analysts had anticipated.
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“The comparable sales growth of 9 percent in the quarter is the result of the strong execution of our strategy combined with better product availability, a continued healthy consumer confidence and positive macro conditions, strength in the gaming category, and a favorable competitive environment, as we benefitted from the exit or decline of certain competitors,” CFO Corie Barry says in a statement.
Online comparable sales were up 17.9 percent, down from 22.3 percent in the third quarter.
Looking ahead to fiscal 2019, Best Buy said it expects same-store sales growth to moderate to between 0 and 2 percent. For the full fiscal 2018 year, Best Buy grew same-store sales by an impressive 5.6 percent.
The company said it plans to continue to invest heavily in its Best Buy 2020 plan, the company’s long-term growth initiative announced last year. Best Buy is looking to eliminate $600 million in annual costs and reach $41 billion in annual revenue by fiscal 2021. The company also expects to grow EPS at between 8 and 9 percent annually and reach $4.75 to $5.00 per share in earnings by 2021.
Best Buy seems to be on track for those long-term goals, saying Thursday that it expects EPS to grow between 9 and 13 percent in 2018. Best Buy guided for first-quarter same-store sales growth of between 1.5 and 2.5 percent and adjusted EPS growth of between 13 and 22 percent.
[See: 7 of the Best Stocks to Buy for 2018.]
Wall Street was caught off guard by the strong fourth quarter. Bank of America analyst Elizabeth Suzuki expected an earnings and same-store sales beat, but Best Buy topped her lofty projections. “BBY is one of the best-managed companies in hardlines, leads in service and omnichannel capabilities and is well-positioned for a trend in smart home products,” Suzuki says.
Bank of America has a “buy” rating and $78 price target for BBY stock.
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Best Buy Co Inc Stock Scores With a Huge Fourth Quarter originally appeared on usnews.com
