Bed, Bath & Beyond: An Excellent Long Term Stock

The best news last week came from Bed Bath & Beyond (BBBY). The earnings report was outstanding. Not only did the company cream Wall Street’s estimate by nine cents a share (34 cents to 25 cents), but earnings were also higher than the same quarter one year ago. So in BBBY’s case, things are actually improving instead of saying that the rate of worsening is slowing.

Here are the earnings results going back a few years:

Quarter	Sales	Gross Profit	Operating Profit	Net Profit	EPS
May-99	$356,633	$146,214	$28,015	$17,883	$0.06
Aug-99	$451,715	$185,570	$53,580	$33,247	$0.12
Nov-99	$480,145	$196,784	$50,607	$31,707	$0.11
Feb-00	$569,012	$238,233	$77,138	$48,392	$0.17
May-00	$459,163	$187,293	$36,339	$23,364	$0.08
Aug-00	$589,381	$241,284	$70,009	$43,578	$0.15
Nov-00	$602,004	$246,080	$64,592	$40,665	$0.14
Feb-01	$746,107	$311,802	$101,898	$64,315	$0.22
May-01	$575,833	$234,959	$45,602	$30,007	$0.10
Aug-01	$713,636	$291,342	$84,672	$53,954	$0.18
Nov-01	$759,438	$311,030	$83,749	$52,964	$0.18
Feb-02	$879,055	$370,235	$132,077	$82,674	$0.28
May-02	$776,798	$318,362	$72,701	$46,299	$0.15
Aug-02	$903,044	$370,335	$119,687	$75,459	$0.25
Nov-02	$936,030	$386,224	$119,228	$75,112	$0.25
Feb-03	$1,049,292	$443,626	$168,441	$105,309	$0.35
May-03	$893,868	$367,180	$90,450	$57,508	$0.19
Aug-03	$1,111,445	$459,145	$155,867	$97,208	$0.32
Nov-03	$1,174,740	$486,987	$161,459	$100,506	$0.33
Feb-04	$1,297,928	$563,352	$231,567	$144,248	$0.47
May-04	$1,100,917	$456,774	$128,707	$82,049	$0.27
Aug-04	$1,273,960	$530,829	$189,108	$120,008	$0.39
Nov-04	$1,305,155	$548,152	$190,978	$121,927	$0.40
Feb-05	$1,467,646	$650,546	$283,621	$180,980	$0.59
May-05	$1,244,421	$520,781	$150,884	$98,903	$0.33
Aug-05	$1,431,182	$601,784	$217,877	$141,402	$0.47
Nov-05	$1,448,680	$615,363	$205,493	$134,620	$0.45
Feb-06	$1,685,279	$747,820	$304,917	$197,922	$0.67
May-06	$1,395,963	$590,098	$148,750	$100,431	$0.35
Aug-06	$1,607,239	$678,249	$219,622	$145,535	$0.51
Nov-06	$1,619,240	$704,073	$211,134	$142,436	$0.50
Feb-07	$1,994,987	$862,982	$309,895	$205,842	$0.72
May-07	$1,553,293	$646,109	$154,391	$104,647	$0.38
Aug-07	$1,767,716	$732,158	$211,037	$147,008	$0.55
Nov-07	$1,794,747	$747,866	$203,152	$138,232	$0.52
Feb-08	$1,933,186	$799,098	$259,442	$172,921	$0.66
May-08	$1,648,491	$656,000	$118,819	$76,777	$0.30
Aug-08	$1,853,892	$739,321	$187,421	$119,268	$0.46
Nov-08	$1,782,683	$692,857	$136,374	$87,700	$0.34
Feb-09	$1,923,274	$785,058	$231,282	$141,378	$0.55
May-09	$1,694,340	$666,818	$142,304	$87,172	$0.34

Here's a look at the trailing four-quarter earnings-per-share:

Note the last bump up in the line. It may not look terribly impressive right now but consider how poorly the economy has done, especially in the housing sector. Bed Bath & Beyond is an excellent long-term stock.

Comments

[Ryu Mei Co:]

This one got bump because of the stimulus money, Line n Things went BK, and low Wall Street's estimate. BBBY may be an excellent long-term stock, but why bother putting your money on this slow-growth, small potential, and carries stuff that Target, or Walmart and other stores have on their shelves.

Moreover, everything is so cheap, why purchase BBBY with a potential of only going to another few percentage points on the upside, whereas, stocks like MOS, or POT, or GE has much more upside potential. AAPL looks very attractive too.

Jun 30 02:19 AM

[Ted Hurlbut:]

I guess I don't see what you're seeing. I see gross margin % and operating margin % declining quarter for quarter over the last four years, and a retailer that is trading in discretionary goods at upscale price points, just a notch below the luxury segment. L&T going out helps only marginally because L&T was positioned below BB&B. I think this company will likely lag the retail recovery, as it begins to gradually unfold this fall.

Jun 30 04:13 PM