Best Buy Stock Earnings: BBY price supported by better revenue than expected in Q1

BBY stock jumps more than 3% after earnings.
The retail company's revenue was better than analysts expected.
Best Buy's full-year outlook was reduced.

Clay Webster FXStreet

Best Buy (BBY) stock is up 3.3% at $75 in the first half hour of Tuesday's session after the retailer reported better-than-anticipated sales figures. Adjusted earnings per share (EPS) came in at $1.57, a penny up on Wall Street consensus. More importantly revenue of $10.65 billion beat forecasts by $220 million.

Also read: SNAP craters 31% after announcing revenue slowdown

The retail sector has been in a slump of late after both Target (TGT) and Walmart (WMT) posted discouraging quarters and forecast a slowdown in their respective businesses. In both cases, management blamed expanding inflation and injured supply chains for affecting their bottom lines, and both companies said inflation was causing consumers to reduce spending.

Both revenue and same store sales at Best Buy dropped 8.5% YoY, but the market has mostly ignored this since analysts were expecting worse figures and BBY stock had already sunk below $70 last week in the wake of the retail sector's major rout caused by Walmart and Target. There always is a benefit to reporting late.

The negative aspect of the report was Best Buy reducing its full-year outlook. However, this failed to move the stock as a negative outlook is now baked into nearly every retail stock. For the full fiscal year, Best Buy reduced its revenue forecast midpoint from $50.05 billion to $49.1 billion. Management now expects adjusted EPS at $8.70 compared to the previous forecast of $9.

Best Buy Stock Forecast: BBY bulls eye gap-closing at $82

BBY stock is presently trading above the 9-day moving average at $72.80. In the premarket, BBY briefly touched the 20-day moving average at $79.47. This moving average is the immediate target, but BBY will likely remain between these two averages for this week as it builds out a base. Ultimately the bulls' goal is to close the May 18 gap down by testing $82.

That is unlikely to happen until a general market turnaround is in the works. With the S&P 500 down 1.3% and the Nasdaq down 3.4%, there is not enough optimism for a push higher at present. Bulls should watch out if BBY share price drops back below the 9-day moving average. In that case it is time to escape.

BBY 4-hour chart

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Author

Clay Webster

FXStreet

Clay Webster grew up in the US outside Buffalo, New York and Lancaster, Pennsylvania. He began investing after college following the 2008 financial crisis.

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