On Thursday, Bed Bath & Beyond Inc. (NASDAQ:BBBY) shares plummeted 25% after announcing its most recent quarterly results. The company reported weaker than expected Q2 earnings, largely affected by supply chain headwinds.
The company posted a Q2 non-GAAP EPS of $0.04, missing the consensus Street estimate of $0.52. Its GAAP earnings per share of -$0.72 also missed the expectation of $0.53. On the other hand, revenue for the quarter plunged by 26% Y/Y to $1.99 billion, $70 million below the average analyst estimate.
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The company’s FQ3 revenue guidance of $1.96 billion to $2 billion also falls short of the consensus Street estimate of $2.02 billion, while its EPS forecast of $0.00 to $0.05 is also lower than the average analyst estimate of $0.29.
From a valuation perspective, Bed Bath & Beyond shares look significantly undervalued at the current forward P/E ratio of about 6.65, making the stock attractive to value investors.
Moreover, its prospective earnings growth of 68% in 2021 and 46% in 2022, could be appealing to growth investors.
Therefore, although the company’s outlook is gravely affected by the supply chain constraints and rising inflation, its fundamentals still look exciting for discount hunters.
Technically, BBBY shares seem to have recently plunged to the oversold conditions of the 14-day RSI. However, the stock also appears to have found support around the $16.90 level, after creating a downward price gap.
Therefore, investors could target potential rebound profits at approximately $23.50, or higher at $29.85. On the other hand, if the stock price continues to fall, it could find support at $11.20, or lower at $4.52.
In summary, although Bed Bath & Beyond missed analyst expectations for the most recent quarterly results, it was primarily due to the market risk rather than risks unique to the company.
Therefore, if the market recovers, the company’s outlook could become more impressive. And with shares plunging 25% on Thursday, it could be time to invest in the BBBY stock.
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