Is Bed Bath & Beyond a buy or sell in July 2021 after earnings miss?

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on Jun 30, 2021
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  • Bed Bath & Beyond shares popped more than 8% on Wednesday to trade at $31.97.
  • The company issued strong revenue guidance for the year ahead of back-to-school sales.
  • The most recent quarterly results missed on earnings and beat revenue expectations.

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Bed Bath and Beyond Inc. (NASDAQ:BBBY) reported its most recent quarterly results on Wednesday pre-market. Its fiscal first-quarter results beat expectations on revenue but missed on earnings. The stock price popped more than 8% after the management issued an upbeat outlook on the full-year revenue.

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BBBY non-GAAP EPS of $0.05 missed expectations by $0.03, while the GAAP earnings of -$0.48 came short by $0.58. Revenue for the quarter grew by nearly 49% to $1.95 billion, beating the consensus Street estimate by $80 million.

Should you invest in BBBY in Q3 2021?

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From a valuation perspective, BBBY shares trade an attractive forward price-earnings ratio of 14.12. The company is on a path back to profitability after enduring a torrid period in the last 12 months. BBBY’s turnaround campaign inflated costs resulting in a lower than expected bottom line.

However, analysts on the company’s earnings growth this year and over the next five years. They expect the EPS to grow by a whopping 68% before increasing by 43% next year. Overall, BBBY has a compounded annual EPS growth expectation of about 73% for the next five years.

Therefore, the company’s future looks exciting for both growth and value investors. Now could be a great time to invest in BBBY shares.

Source – TradingView

Technical overview: why buy Bed Bath & Beyond shares in July 2021?

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Technically, Bed bath & Beyond shares have recently bounced off the 100-day moving average. The stock retains a bullish outlook following the rebound, but it is yet to hit overbought conditions. Given the company’s solid top-line guidance for the full-year results, the current rebound presents an opportunity to buy BBBY shares.

Investors looking to pounce on the momentum can target short-term profits at approximately $36.94. More optimistic investors can target extended rally profits at $44.33. On the other hand, the pullback will find an immediate support level at $27.55, while extended declines will likely bounce back off $23.67.

Bottom line: the catalysts for buying BBBY stock now

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In summary, BBBY looks incredibly undervalued based on the forward P/E ratio. Its expected earnings growth provides a massive boost for the stock price going into Q3. The company’s current rebound still has momentum, as it is yet to hit overbought conditions.

Therefore, buying Bed Bath & Beyond in July 2021 could yield significant returns in the coming months.

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