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Mild Expectations For Best Buy And GameStop Earnings

Mild Expectations For Best Buy And GameStop Earnings - Best Buy Co., Inc. NYSE:BBY, Gamestop Corporation NYSE:GME
  • Upcoming earnings highlights include the latest results from two specialty retailers.
  • Wall Street analysts are looking for earnings and revenue declines from both of them.
  • Both have tended to beat earnings expectations in recent quarters.

Many retailers have had their moment in the earnings spotlight in the past week or so, and overall results have been mixed, along with investor and analyst reaction. Disappointing results have been blamed on everything from Amazon.com, Inc. AMZN 0.94% to the weather.

There is more to come, even as the retail earnings parade begins to wind down, including this week's scheduled reports from specialty retailers Best Buy Co Inc BBY 1.84% and GameStop Corp. GME 1.76%. As with a number of other retailers expected to share their results this week, consensus forecasts call for shrinking earnings.

Wall Street's consensus forecast for consumer electronics superstore operator Best Buy is for earnings per share (EPS) to have shrunk more than 12 percent from the same period of last year to $0.43. That estimate is the same as it was 60 days ago, but even the highest individual estimate listed would be a decline. The consensus of 27 Estimize respondents calls for $0.45 per share for the fiscal quarter that ended in July.

Estimize underestimated Best Buy's revenue in the previous quarter, and this time, respondents are looking for $8.41 billion, which would be less than 2 percent lower year-over-year. The Wall Street estimate is essentially the same. Wall Street also underestimated the top line in the previous period.

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When GameStop shares its fiscal second-quarter results, the Wall Street forecast is that its earnings will have slipped four cents from a year ago to $0.27 per share, on $1.72 billion in revenue, which would be a more than 2 percent decline. Note that the estimate has ticked down by a penny in the past 60 days, and the highest listed individual estimate still represents a one-cent decline year over year.

The forecast from 36 Estimize respondents sees EPS from the leading video game retailer coming in at $0.28. They are a tiny bit more optimistic on revenue too, with a consensus forecast of $1.73 billion for the three months that ended in July. Estimize narrowly underestimated revenue in the previous quarter, and the current estimate would be the lowest quarterly revenue in the past six quarters.

Best Buy is scheduled to report its results before the opening bell on Tuesday, while GameStop is expected to post its numbers late on Thursday.

Other retailers that Wall Street analysts expect to show some earnings decline when they report this week include Express, Guess? and Tiffany. A net loss is in the cards for Kirkland's and Tilly's, if the analysts are correct.

EPS from Michaels and Williams-Sonoma are expected to be the same as in the year-ago period. The consensus forecasts call for per-share earnings at Burlington Stores, Dollar General, Dollar Tree, Signet Jewelers and ULTA Beauty to be at least a little higher than a year ago.

The following week, keep an eye out for retail earnings reports from the likes of Abercrombie & Fitch, Lands' End and Lululemon Athletica.

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Disclosure: At the time of this writing, the author had no position in the mentioned equities.

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DateFirmActionFromTo
Aug 2016Ladenburg ThalmannAssumesOutperform
Aug 2016JefferiesDowngradesBuyHold
Jun 2016Longbow ResearchInitiates Coverage onNeutral

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