Bed Bath & Beyond - Momentum Stock Buy

Bed Bath & Beyond, Inc. (BBBY) posted strong first-quarter results in June that easily beat expectations, sending estimates higher as analysts revise their earnings projections.

Company Description

Bed Bath & Beyond Inc. operates a chain of retail stores specializing in domestic merchandise like linens and kitchenware. The company was founded in 1971 and has a market cap of $9 billion.

The weak consumer environment has hurt many high-end discretionary retailers. But Bed Bath and Beyond has prospered due to its strong value proposition and emphasis on consumer necessities. That helped the company to solid first-quarter results, reported on June 24.

Second-Quarter Results

Sales were up 2.8% from last year to $1.65 billion. Earnings came in at 34 cents per share, 10 cents ahead of the Zacks Consensus Estimate. The company has beat in each of the last 4 quarters by an average of 11 cents, or 33%.

The company noted that it was helped by a continued focus on cost control and strong inventory management.

Estimates Jump

After the solid quarter, estimate moved higher, with the current year advancing 17 cents to $1.76 per share. The next-year estimate stands at $2.00, a 13.5% growth projection.

Valuation

In spite of the recent gains, shares still look reasonably priced, trading with a P/E multiple of 19X, only a slight premium to the overall market.

The Chart

Shares of BBBY bottomed out last November just above $16 before taking flight and recently topping off above $17. Take a look at the nice trend below.

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