Best Buy's Big $1 Billion Buyback

 | Feb 25, 2016 | 3:00 PM EST
  • Comment
  • Print Print
  • Print
Stock quotes in this article:

bby

Consumer electronics retailer Best Buy (BBY) jumped more than 2% in Thursday trading off news of its fourth-quarter earnings. The company also announced plans to hike its dividend 22%, while scooping up about $1 billion of its own stock over the next two years.

Earnings per share of $1.53 on the quarter ticked up 3% year over year, but sales were weighed down by a nearly $400 million decline in its international segment, which totaled $1.1 billion. Meanwhile, domestic sales fell 1.5% to $12.5 billion.

"In the fourth quarter, we delivered enterprise revenue of $13.62 billion, improved our non-GAAP operating income rate by 10 basis points to 5.9% and delivered a better-than-expected non-GAAP EPS of $1.53 versus $1.48 last year," CEO Hubert Joly said in a statement. "In our domestic business, we exceeded our bottom-line expectations due to a well-executed holiday plan, a disciplined promotional strategy, better recovery on returned and clearance product and strong expense management."

And it appears the Richfield, Minn.-based company is lately coming through on Joly's plans to scale down expenses: Shares are up 13% in February, but down 16% over the last 12 months. 

source: Best Buy website

Joly reiterated the company's "Renew Blue" strategy on Thursday, citing the importance to rebuilding Best Buy's image as a cutting-edge tech hub.

"Turning to fiscal 2017, we are entering the next phase of our Renew Blue strategy. Our purpose is to build a company that does a unique job of helping customers learn about and enjoy the latest technology," he said. "As we begin this phase, we will execute against the following priorities: One, build on our strong industry position and multichannel capabilities to drive the existing business; two, drive cost reduction and efficiencies; and three, advance key initiatives to drive future growth and differentiation."

Best Buy's revenue outlook also outpaced forecasts by Goldman Sachs (GS), which maintains a $33 12-month price target for Best Buy.

"The firm guided to a 2.4%-3.6% sales decline, better than our -4.0%, but below the Street's -1.1%," Goldman Sachs analysts Matthew Fassler and Katie Price said in a Thursday report.

"Downside risks relate to profit recovery in Canada and product cycle volatility," they said. "Upside risks relate to valuation, capital allocation, sales strength in TV/appliances."

Columnist Conversations

On Wednesday of last week NFLX appeared headed for a deep breakdown.  The stock fell over 3.4% that day o...
We added this one Monday and mentioned it Tuesday right here in CC, we'll take it off the board. SOLD WDC O...
The market is rebounding nicely after yesteday's sell-off.  Biotech has recaptured half of its three perc...
The Federal Reserve has made it relatively clear that they intend to raise interest rates in the December mee...

BEST IDEAS

REAL MONEY'S BEST IDEAS

News Breaks

Powered by

BROKERAGE PARTNERS

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.


TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.