It's been a good week for Bed Bath & Beyond Inc. (NASDAQ:BBBY) shareholders, because the company has just released its latest quarterly results, and the shares gained 8.2% to US$31.30. The results don't look great, especially considering that the analysts had been forecasting a profit and Bed Bath & Beyond delivered a statutory loss of US$0.48 per share. Revenues of US$2.0b did beat expectations by 4.3% though. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
View our latest analysis for Bed Bath & Beyond
After the latest results, the consensus from Bed Bath & Beyond's 19 analysts is for revenues of US$8.30b in 2022, which would reflect an uncomfortable 16% decline in sales compared to the last year of performance. Per-share earnings are expected to shoot up 35% to US$1.16. In the lead-up to this report, the analysts had been modelling revenues of US$8.15b and earnings per share (EPS) of US$1.45 in 2022. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a pretty serious reduction to EPS estimates.
Althoughthe analysts have revised their earnings forecasts for next year, they've also lifted the consensus price target 14% to US$29.78, suggesting the revised estimates are not indicative of a weaker long-term future for the business. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Bed Bath & Beyond at US$44.00 per share, while the most bearish prices it at US$19.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. Over the past five years, revenues have declined around 4.9% annually. Worse, forecasts are essentially predicting the decline to accelerate, with the estimate for an annualised 21% decline in revenue until the end of 2022. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 9.9% per year. So it's pretty clear that, while it does have declining revenues, the analysts also expect Bed Bath & Beyond to suffer worse than the wider industry.