• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Stocks

Best Buy Beats Estimates but Might Not Be Best Choice for Investors

Despite strong results and steady guidance, I would prefer to see this one move on share price before going long on BBY.
By TIMOTHY COLLINS
Nov 26, 2019 | 12:50 PM EST
Stocks quotes in this article: BBY, DLTR, AMZN, HD

The schism between the doing-well companies and the disappointing ones in the retail sector continues in full force as we enter the holiday season. This time it was Best Buy's ( BBY) turn to stand on the podium of champions, while Dollar Tree ( DLTR)  looked up from below its 15% shellacking Tuesday morning. The electronics retailer turned in adjusted earnings per share of $1.13, a dime ahead of estimates. Revenue of $9.76 billion nudged past estimates of $9.7 billion.
 
Best Buy cited the move toward its New Blue strategy as a key for the bottom line beat this quarter. Subscription-based repair and tech support services goosed margins and benefited the bottom line. Ironically, this is a service Amazon ( AMZN) has not been able to make click. I believe this reflects the customers' need for some touch and feel for portions of retail, which includes electronics and appliances. We saw this in Home Depot's ( HD) numbers, too, as the click-and-collect hasn't seen the acceptance management had expected. There are still purchases in which people want and need hand-holding. Smart home, mobile devices, and electronics fit that category.
 
Management projected Q4 earnings per share of $2.65 to $2.75 vs. its previous estimate of $2.65, so investors can expect an in line to Q4-beat as of Tuesday on revenue with a midpoint slightly below estimates. Basically, this quarter's revenue beat is next quarter's midpoint shortfall. The upper end of revenue guidance does exceed current consensus, so it is tough to call this a revenue guide down. I'd say the number is in line with expectations.
 
 
The price action on Best Buy may draw in some chasers as we head into the holidays. The stock has maybe the ugliest bullish "W" shaped pattern I've seen, but it is there and with slightly higher lows. I'd want to see shares close over $81.50 this week before getting too excited and chasing. Best Buy has often fizzled out on its rallies when the Full Stochastics indicator and StochRSI run in overbought territory for any length of time. Also, the Chaikan Oscillator has actually weakened here showing a small bearish divergence. In other words, despite the strong results and steady guidance, I would prefer a retracement to the $75 area and signs of support before going long this name. The results, though, were strong enough that Best Buy doesn't sit well as a retail short candidate in this environment.
 
(Amazon and Home Depot are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells these stocks? Learn more now.)
 
Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time publication, Collins had no position in the securities mentioned.

TAGS: Investing | Options | Stocks | Consumer Services | Retail | Technology | Stock of the Day

More from Stocks

Jim Cramer: What History Tells Us About Bond-Rate Scares Like This

Jim Cramer
Feb 27, 2021 2:01 PM EST

We could have some real pain ahead for some stocks. Five different kinds.

Navigating a Market Correction

James "Rev Shark" DePorre
Feb 27, 2021 10:00 AM EST

The most critical factor in long-term market success is the ability to effectively navigate market corrections.

Corrective Action Produces Fading Confidence and Technical Damage

James "Rev Shark" DePorre
Feb 26, 2021 5:08 PM EST

It's dangerous to have too much exposure now, but the potential for a good recovery is there once interest rate issues are digested.

I'm Intrigued by the Recent Pullback in Aurora Mobile

Timothy Collins
Feb 26, 2021 3:30 PM EST

While the Chinese company is still not profitable, it is cash flow positive.

Salesforce Gets a Quant Downgrade on Top of Weakening Charts

Bruce Kamich
Feb 26, 2021 12:50 PM EST

Here's what investors and traders need to think about.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 11:32 AM EST JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    Navigating a Market Correction
  • 11:29 AM EST GARY BERMAN

    Where Does the Nasdaq Go From Here?

    Where does the Nasdaq Composite (CCMP) index go fr...
  • 12:31 PM EST GARY BERMAN

    Has the Short-Term Top Come for the XLF/Banks?

    The has triggered a long-term overbought signal ...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

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

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.

FactSet 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.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login