Bed Bath & Beyond’s Earnings Trend
Posted by Eddy Elfenbein on June 23rd, 2011 at 10:15 am

Shares of Bed Bath & Beyond ($BBBY) jumped as much as 5.4% this morning. Here’s a look at the company’s earnings trend along with their updated earnings forecast. Just by looking at the chart, you see that the upper-end of the forecast is still well within the recent trend.

Year-over-year net profit margins have now increased for nine-straight quarters. For the last four quarters, net margins are running at 9.3% which is closing in on the company’s peak of 10% reached in 2005.

Courtesy of Seeking Alpha, here’s part of yesterday’s earnings call where the company details its forecast for the rest of this year:

The following are our major planning assumptions for the remainder of fiscal 2011.

One, including the 12 stores open so far this year, we anticipate that the total number of new store openings will be approximately 40 to 45 stores across all of our concepts. Currently, we believe that fiscal 2011 store openings by concept will be substantially similar to fiscal 2010 with a slight shift to several more buybuy BABY stores and slightly fewer Bed Bath & Beyond stores. As the year progresses and we gain greater visibility, the total number of stores that we will open may be updated. We will continue to place Harmon Face Values health and beauty care offerings in stores across all of our concepts. As always, we remain flexible to take advantage of real estate opportunities that may arise.

Two, we expect to continue our program of expanding, renovating and/or relocating a number of our stores in fiscal 2011.

Three, we are modeling a 2 to 4 percentage increase in comparable store sales for the second quarter and full fiscal year.

Four, based on these comparable store sales assumptions, we are modeling consolidated net sales to increase by 5% to 7% in the second quarter and full year of fiscal 2011.

Five, assuming these sales levels, in addition to planning the continuation of the shift in the mix of merchandise sold to lower margin categories, we are modeling our operating profit to be in the range of flat to slightly leveraged for the fiscal second quarter and to be slightly leveraged for the full year.

Six, interest income is expected to be relatively flat versus fiscal 2010.

Seven, the second quarter and full year tax provision are estimated in the mid- to high-30s percent range with expected variability as taxable events occur.

Eight, capital expenditures for fiscal 2011, principally for new stores, existing store refurbishments, information technology enhancements, including increased spending on our interactive platforms and other projects, continue to be planned at approximately $250 million, which of course, remains subject to the timing of projects.

Nine, depreciation for fiscal 2011 is estimated to be approximately $190 million.

Ten, we expect to generate positive operating cash flow in fiscal 2011 and continue to fund operations entirely from internally generated sources.

Eleven, in the first quarter, we completed our $1 billion share repurchase program and, thereafter, began our $2 billion program authorized in December 2010, which we continue to model to be completed in approximately 2 years. Our share repurchase program may be influenced by several factors, including business and market conditions.

Based on these and the other planning assumptions, we are modeling net earnings per diluted share to be in the range of approximately $0.77 to $0.82 for the fiscal second quarter of 2011. For all of fiscal 2011, we are modeling net earnings per diluted share to increase by approximately 15% to 20%.

Morning News: June 23, 2011
Posted by Eddy Elfenbein on June 23rd, 2011 at 8:05 am

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Bed Bath & Beyond Raises Full-Year Forecast
Posted by Eddy Elfenbein on June 22nd, 2011 at 4:35 pm

Wowie! Bed Bath & Beyond ($BBBY) just had an outstanding earnings report for their fiscal Q1.

Let’s go over the numbers. For Q1, they earned 72 cents per share. When the last earnings report came out, they told us to expect earnings to range between 58 cents and 61 cents per share. I knew that was low and in last week’s CWS Market Review, I said I was expecting modest earnings of around 63 cents per share.

Turns out, I wasn’t optimistic enough. The shares are up about 2% after hours.

I also said that I was looking forward to Q2 guidance of 80 to 85 cents per share. They gave us guidance of 77 cents to 82 cents per share. So I was still in the ballpark.

This was a great earnings report. The best news of all is that the company also revised their full-year forecast higher. The numbers here aren’t as clear. At the start of the year, BBBY told us to expect an earnings increase for the entire year of 10% to 15%. For 2010, they earned $3.07 which came to $3.38 to $3.53 per share.

Now BBBY has upped that full-year forecast to 15% to 20%. That translates to a range of $3.53 to $3.68 per share.

Bed Bath & Beyond Inc. today reported net earnings of $.72 per diluted share ($180.6 million) in the fiscal first quarter ended May 28, 2011, an increase of approximately 38% versus net earnings of $.52 per diluted share ($137.6 million) in the same quarter a year ago. Net sales for the fiscal first quarter of 2011 were approximately $2.110 billion, an increase of approximately 9.7% from net sales of approximately $1.923 billion reported in the fiscal first quarter of 2010. Comparable store sales in the fiscal first quarter of 2011 increased by approximately 7.0%, compared with an increase of approximately 8.4% in last year’s fiscal first quarter.

During the fiscal first quarter of 2011, the Company repurchased approximately $245 million of its common stock representing approximately 4.8 million shares. This included the completion of the $1 billion share repurchase program authorized in 2007. As of May 28, 2011, the balance remaining of the share repurchase program authorized in December 2010 was approximately $1.892 billion dollars.

The Company is now modeling net earnings per diluted share to be approximately $.77 to $.82 for the fiscal second quarter of 2011 and to increase by approximately 15% to 20% for all of fiscal 2011.

Here’s a look at BBBY’s quarterly numbers for the past few years:

The Fed’s Projections
Posted by Eddy Elfenbein on June 22nd, 2011 at 2:19 pm

Here are the new economic projections from the Fed.

Bernanke LIVE!
Posted by Eddy Elfenbein on June 22nd, 2011 at 2:15 pm

Live TV : Ustream

Today’s Fed Statement
Posted by Eddy Elfenbein on June 22nd, 2011 at 12:29 pm

Here it is:

Information received since the Federal Open Market Committee met in April indicates that the economic recovery is continuing at a moderate pace, though somewhat more slowly than the Committee had expected. Also, recent labor market indicators have been weaker than anticipated. The slower pace of the recovery reflects in part factors that are likely to be temporary, including the damping effect of higher food and energy prices on consumer purchasing power and spending as well as supply chain disruptions associated with the tragic events in Japan. Household spending and business investment in equipment and software continue to expand. However, investment in nonresidential structures is still weak, and the housing sector continues to be depressed. Inflation has picked up in recent months, mainly reflecting higher prices for some commodities and imported goods, as well as the recent supply chain disruptions. However, longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The unemployment rate remains elevated; however, the Committee expects the pace of recovery to pick up over coming quarters and the unemployment rate to resume its gradual decline toward levels that the Committee judges to be consistent with its dual mandate. Inflation has moved up recently, but the Committee anticipates that inflation will subside to levels at or below those consistent with the Committee’s dual mandate as the effects of past energy and other commodity price increases dissipate. However, the Committee will continue to pay close attention to the evolution of inflation and inflation expectations.

To promote the ongoing economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent. The Committee continues to anticipate that economic conditions–including low rates of resource utilization and a subdued outlook for inflation over the medium run–are likely to warrant exceptionally low levels for the federal funds rate for an extended period. The Committee will complete its purchases of $600 billion of longer-term Treasury securities by the end of this month and will maintain its existing policy of reinvesting principal payments from its securities holdings. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate.

The Committee will monitor the economic outlook and financial developments and will act as needed to best foster maximum employment and price stability.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Richard W. Fisher; Narayana Kocherlakota; Charles I. Plosser; Sarah Bloom Raskin; Daniel K. Tarullo; and Janet L. Yellen.

Lagging Financials
Posted by Eddy Elfenbein on June 22nd, 2011 at 8:48 am

Here’s a good look at the relative performance of financial stocks. This chart shows the Financial Sector ETF ($XLF) compared with the S&P 500.

We already know that financial stocks got crushed during the financial crisis, but look at what’s happened since April of last year. Financial stocks climbed during the initial part of the rally but have been noticeably subdued over the past year. It seems as if they’ve grown even weaker this year.

Can We Make It Five Straight Up Days?
Posted by Eddy Elfenbein on June 22nd, 2011 at 8:34 am

Eh…probably not, but you never know. The U.S. stock market is looking to open lower today even though the Prime Minister of Greece survived his no-confidence vote today.

The main of focus of today’s trading will be the Federal Reserve’s meeting. The policy statement will come out at 12:30 and Ben Bernanke’s press conference will be at 2:15 pm. Most likely, this will be a non-event.

What’s interesting is that Bernanke’s latest comments have been directed to Congress. He wants the U.S. to clean up its fiscal mess, but not just yet; otherwise it could spoil any possible recovery. Specifically, Bernanke has said that Congressional negotiators shouldn’t use the debt limit debate as a bargaining chip to force spending cuts.

JPMorgan Chase ($JPM) said that it reached a deal with the SEC yesterday to pay a $153.6 million fine to settle charges that they misled investors.

In March and April 2007, as the housing market teetered toward collapse, J.P. Morgan senior management pressed the salespeople responsible for Squared CDO 2007-1, a complex “collateralized debt obligation” of derivatives linked to the mortgage market, to avoid permanent losses, the Securities and Exchange Commission said.

The bank was already looking at a $40 million mark-to-market loss, but decided to press forward with a marketing pitch to institutional clients instead of shutting down the deal, the SEC said, in an effort to avoid greater losses.

Let’s add some perspective: JPM has nearly four billion shares outstanding so this fine works out to less than four cents per share. Just the news of the resolution of the issue helped the stock gain 43 cents per share yesterday.

The real danger is how much the bank is exposed to future lawsuits.

Morning News: June 22, 2011
Posted by Eddy Elfenbein on June 22nd, 2011 at 7:13 am

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Bounce!
Posted by Eddy Elfenbein on June 21st, 2011 at 3:42 pm

Probably the widest gap between what I was taught in business school and what I’ve seen in the real world is technical analysis. Every study says it’s garbage. All the respectable folks say that you’re seeing trends that really don’t exist.

I’m a skeptic, too. Still, when we bounce off the 200-DMA so clearly, it makes me wonder: