Will Best Buy's Q3 Results Continue To Exceed Consensus?

(RTTNews) - Consumer electronics retailer Best Buy Co. Inc. (BBY) is scheduled to release its third-quarter numbers before the bell on Thursday, November 19th. Analysts polled by Thomson Reuters are estimating earnings of $0.35 per share on revenue of $8.86 billion.

Growing consumer demand for technology products and services including appliances and mobile phones is expected to remain positive catalyst in quarters to come. This growth is driven by technology and product innovation and by micro factors such as population growth, the housing recovery and healthy living trends that are driving momentum in Best Buy's appliance, home theater, connected homes and health and wearables business.

Also, the investments that the company made in its Renew Blue strategy to offer advice, service and convenience at competitive prices are paying off. The company has also been continuously driving operational and cost efficiencies, which are resulting in reduced repair costs and a higher year-over-year gross profit rate.

For the third quarter, the company expects the continued strength in its domestic business to offset by the near-term impacts of Canada. It projects revenue growth to be in a range of flat to negative low-single digit rate.

The company expects the non-GAAP effective income tax rate from continuing operations to be in the range of 39% - 40% versus 38.1% last year, which could result in a negative $0.01 year-over-year non-GAAP diluted EPS impact in Q3 fiscal 2016.

"As we look forward, while we are cognizant of the recent financial market turbulence, we believe the combination of an opportunity-rich environment and the strength of our competitive advantages leads us to have a positive outlook about our future prospects, starting with the important back-to-school third quarter," said President and CEO Hubert Joly while reporting second-quarter results.

In The Last Quarter...

The company's second-quarter net income attributable to Best Buy shareholders was $164 million or $0.46 per share, higher than the previous year's $146 million or $0.42 per share.

Net earnings from continuing operations for the quarter grew to $164 million or $0.46 per share from $137 million or $0.39 per share last year.

Excluding charges, adjusted earnings from continuing operations was $174 million or $0.49 per share, compared to $148 million or $0.42 per share for the year-ago quarter. On average, 23 analysts polled by Thomson Reuters expected earnings of $0.34 per share. Analysts' estimates typically exclude certain special items.

Revenue increased to $8.53 billion from $8.46 billion last year, and topped twenty Wall Street analysts' consensus estimate of $8.29 billion.

Operating margin for the quarter improved 70 basis points to 3.4% from last year's 2.7%, as gross profit margin expanded 120 basis points, partially offset by a 50 basis points increase in selling, general and administrative expenses as a percentage of total revenues.