Best Buy (BBY 81.62, -0.46, -0.56%) will report second quarter results tomorrow morning and management will host a conference call at 8:00 a.m. EST.
Expectations are high as analysts expect second quarter and fiscal 2019 results above the high end of guidance.
The company guided for second quarter non-GAAP EPS up 12-19% to $0.77-0.82 with revenue up 2.3% at the midpoint to $9.1-9.2 bln and comparable store sales up 3-4%.
Best Buy's outlook for fiscal 2019 (ending January) calls for non-GAAP EPS up 9-13% to $4.80-5.00 on revenue of $41-42 billion with comparable store sales up 0-2% and adjusted operating margins flat at 4.5%.
When asked why they didn't raise fiscal 2019 guidance after blowing out first quarter estimates, management said the company was tracking towards the high end of its outlook but conveyed a conservative tone, saying it was too early to raise guidance.
Last quarter, Best Buy Chairman and CEO Hubert Joly said: "This strong performance was broad-based, with positive comparable sales across all channels, geographies and most of our product categories. The top-line strength is the result of continued healthy consumer confidence, product innovation in multiple areas of technology, and our unique value proposition resonating with customers. We are executing well and customers are responding positively to the unique experience we provide to them online, in stores and in their homes."
Best Buy has blown away estimates four of the last five quarters. The company has done an excellent job in taking market share in the consumer electronics retail market by investing in ecommerce and service initiatives while keeping prices competitive.
The Census Bureau reported retail sales grew 6.3% in the three months ending in July. Wal-Mart and Target both reported their best sales in a decade, so we can expect Best Buy to continue its stellar performance.
Technology innovation and the company's investments in services should continue to drive growth.
The durable and dependable Apple iPhone cycle should provide a tailwind in the second half of the year. Apple is expected to unveil three new iPhone models next month after the ‘super cycle' failed to meet expectations last year.
Best Buy has a ~$23 bln market cap and trades at just over 16x earnings estimates.