If you have been following Bed Bath and Beyond (NASDAQ: BBBY) stock over the last few years, you know that investors have not treated the stock well. The stock price has been trending down since mid-2015 and since mid-2017, the price has essentially been flat.
Most of this is due to the fear of Amazon. If you listen to analysts, it seems as though Amazon is the only option any more for every single thing. In 5 years, there will be no more retail stores, no more pharmacies, nothing. Amazon will control everything.
Call me a skeptic, but I don't think Amazon is going to take over the world. And as a result of this, I think the fears investors have in Bed Bath and Beyond are unfounded. This isn't to say the company doesn't face stiff competition. But there is a lot of hope with this company. A lot more than what many people are talking about.
Looking At Where Bed Bath And Beyond Is Now
Bed Bath and Beyond just released earnings and they weren't that bad. Earnings per share came in at $1.48, beating estimates by $0.08. Revenues were up 5% versus the same period last year, at $3.7 billion, beating estimates by $30 million.
But the stock tanked. Why? It's because the company lowered guidance through 2019, which spooked investors. But this pullback in the stock price is a golden opportunity for savvy investors. Here is why.
Why I Like Bed Bath And Beyond
First, same store sales, while not great, aren't as bad as experts thought. The estimates were for same store sales to drop 2.3%. They only dropped 0.6%. While a drop isn't good news, the decline is drastically less than expected. This tells me that experts are overly negative on the stock.
Second, the company raised their dividend and are still working through a share buyback program. Both of these should provide some short term support for the stock price.
Finally, there is Toys R' Us. What does this company have to do with Bed Bath and Beyond? Toys R' Us is shutting down, which includes Babies R' Us. Bed Bath and Beyond owns buybuy Baby. This is huge for Bed Bath and Beyond as it will drive a lot more traffic to their stores.
