Bed Bath & Beyond (BBBY) was reiterated at Barclays (BCS), UBS (UBS) and Canaccord Genuity. The ratings are "overweight", "neutral", and "buy" with price targets of $76/$71/$73, respectively. The enterprise reported earnings of $351 million, up from year-earlier earnings of $283.5 million. Analysts were expecting profit of $1.33 a share, profit was reported at $1.48 a share.
That being said, we are going to compare the firm's practical competitors' investment potential.
Bed Bath & Beyond
Sales the past five years have increased at an annual rate of 8.5 percent while earnings per share increased at a 9.8 percent pace. Earnings this year are reported as growing at a 33 percent pace and next year at 14 percent. Earnings the next five years are forecasted to increase 15 percent annually.
Gross, operating and profit margin are 41.5, 16 and 10 percent respectively. Return on equity is 24 percent. Institutions own 91 percent of the shares outstanding and insiders 1 percent.
The firm doesn't use debt and is liquid. The quick ratio is 1.29 and the current ratio is 2.86.
Year to date common equity is up 14.2 percent. Shares are trading above the rising 50-day simple moving average and above the rising 45 degree long-term trendline on the 3-box reversal point and figure chart.
Wal-Mart Stores (WMT)
Wal-Mart increased sales at a 5.1 percent annual pace of the past five years. Earnings increased 9.25 percent annually during the past five years. Earnings this year are reported as increasing at 8.5 percent. Earnings next year are forecasted to increase 9.1 percent and 9.25 percent over the next five years.
Gross, operating and profit margins are 25, 6 and 3.7 respectively while return on equity is 22.5 percent. Insiders own 48 percent of the firm and institutions own 31.4 percent.
Debt-to-equity and long-term debt-to-equity are 0.75 and 0.66. The quick ratio is 0.23 and the current ratio is 0.88. The relatively low quick ratio is probably a result of a low profit margin as a consequence of maintaining "everyday low prices."
Year to date common shares are up 1.5 percent. Shares are trading at roughly the flattening 50-day simple moving average, a sign of some distribution occurring. The long-term 45 degree trendline is below the share price.
Sears Holdings Corporation (SHLD)
Sales the past five years decreased at an annual rate of 4.75 percent while earnings increased at 2.3 percent. Earnings this year declined by 2,859 percent. Earnings are expected to rebound 2.2 percent next year. Earnings are forecasted to grow 21 percent the next five years.
Gross, operating and profit margins are 25.5, -3.6, and -7.5 respectively and return on equity is -48.7 percent. Insider ownership is 26.2 percent and institutions own 87.5 percent. The average analyst target price is 20.25.
Sears uses some debt and the firm isn't carrying a lot of the most liquid assets; the quick ratio is 0.20. The firm trades at price that is 0.16 of sales.
An attempt at a turnaround, divesture of assets, liquidation or bankruptcy reorganization is becoming increasing likely.
Year to date the stock is up 98 percent. Shares are trading like a speculative issue and are trading below the declining 20- day simple moving average. The share price is roughly equal to the rising 50-day moving average. The issue is pulling back to the rising 45 degree trendline.
Macy's, Inc. (M)
Sales decreased at an annual pace of 0.4 percent the last five years and earnings increased at 10.1 percent. The decline in sales can partly be attributed to the "Great Recession." The economy has strengthened recently with the unemployment rate dropping and earnings this year are 47.2 percent higher. Earnings are forecasted to slow from this year's robust pace to 13.8 percent next year. The long-term earnings projection calls for a 10.6 percent increase per annum over the next five years.
Respectively, gross, operating and profit margins are 40.4, 9.1 and 4.8. Return on equity is about 22 percent with institutions (whom own 92.3 percent of shares) benefiting.
Year to date the stock is up 27.3 percent. Debt to equity is 1.31. Reflective of the business model, a large percentage of the assets are less liquid; the current ratio is 1.4 and the quick ratio is 0.6.
Macy's is trading above the rising 50-day moving average and long-term 45 degree trendline.
Macy's & Bed Bath & Beyond
According to consumers, Macy's and Bed Bath and Beyond offer a higher quality product than the competition. The perception of higher quality products are being reflected in the share price and company financials. These two companies should be great long-term investments.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
