The stock of the retailer Bed Bath & Beyond has been quite volatile recently. On Wednesday, the company released mixed Q4 earnings. This sent the price in a new swing.
Why is it important?
Bed Bath & Beyond posted the earnings per share of $1.20 versus the forecast EPS of $1.11. However, the firm’s revenue came at $3.31 billion missing the expected level of $3.33 billion. In addition, same-store sales fell by 1.4%, compared to the estimated decrease of 1.3%. The company also reported its first annual loss ever.
In many cases, forward guidance is much more important than the results of past figures. Bed Bath & Beyond is hopeful about 2019 as a whole: it sees full-year adjusted EPS in the $2.11-$2.20 area, above analysts’ expectations of $1.80.
The company said it named Patrick Gaston lead independent director and plans to make other changes in management, governance structure, and compensation practices. In addition, Bed Bath & Beyond has the so-called Transformation Plan, through which it aims to encourage mid-and-long-term revenue growth. The plan includes such steps as focusing on customer engagement and expanding online engagement.
On the other hand, a lot of analysts criticize the company’s management for the lack of transparency and wishful thinking. Activist firms (Legion Partners, Macellum, and Ancora Advisors) keep pushing for the complete replacement of the firm’s Board and CEO. They plan to reveal their operational plan to fix Bed Bath & Beyond in two weeks. In the longer term, the real challenge for the retailer is the online shopping, so even though the stock is cheap with the P/E ratio of about 8.5, we have serious doubts that it’s worth the money.
The stock had been trading in the downward trend since 2012. The 100-week MA in the $20.50 area will limit the price on the upside. Support is located at $16.20 (50-week MA).