Bed Bath and Beyond: Zacks’ Bear of the Day Play

Anyone that has bought a new house or moved recently is familiar with Bed Bath & Beyond (BBBYFree Report) . The company has a wide range of home goods and key products for furnishing a new place, making it a go-to spot for a variety of gadgets and home needs.

However, people are probably familiar with another aspect of Bed Bath & Beyond, their never-ending coupons. I know that my place is filled with unused Bed Bath & Beyond coupons, while I never even considering buying something from there without one. Sure, they have made some changes to this program over the years—such as reducing the percentage off after a certain time—but I know a new one is either in my mailbox right now, or is going to be there soon.

Due to this heavy reliance on coupons and the increasing threat of online competition, it has been a pretty rough stretch for Bed Bath and Beyond ( (BBBYFree Report) investors. Shares are down about 16% year-to-date in what has otherwise been a great year for the markets, while the company has lost about 46% over the past two years as well.

But as bad as things have been for BBBY, the pain might not be over just yet. That is at least the case if we look to recent earnings estimates for the stock, as these have been pretty negative across the board.

Recent Estimates

In just the past week, we have seen ten analyst estimates go lower for the current quarter (compared to zero higher), while we have seen a dozen estimates go lower for the current year and next year, with zero higher in either time frame. And with a pretty sluggish history in earnings season—including three straight misses—it is hard to have confidence in BBBY for 2017.

This is especially true when you consider what the recent estimate changes have done to the consensus estimate. In the past two months, the consensus estimate for BBBY has fallen by about 4.3% for the current quarter and 4.8% for the current year, while we also see even more significant drops for the next quarter and next year time frames too.

BED BATH&BEYOND Price, Consensus and EPS Surprise

BED BATH&BEYOND Price, Consensus and EPS Surprise | BED BATH&BEYOND Quote

 

Earnings are now expected to decline by about 10% for the current year, while sales are expected to tick up by less than 1%. No wonder the stock has a Zacks Rank #5 (Strong Sell), and why we are looking for more underperformance in the months ahead.

Other Picks

Clearly, Bed Bath and Beyond has some weak fundamentals and it may be poised for more turbulent trading in the weeks ahead. The industry isn’t looking that much better though, as the space has a bottom 40% industry rank, and the sector is in the bottom 20% too.

Still, there are a few decent choices in this corner of the retail market, at least if you know where to look. One that might have some potential in the New Year is Big 5 Sporting Goods (BGFVFree Report) , a company with a Zacks Rank #1 (Strong Buy) and an ‘A’ Grade for its fundamental score too.

This company is actually the only strong buy in its industry (at time of writing) and it has positive projected EPS growth this year, along with a P/S ratio of just 0.4. So, it looks to be a solid choice for retail investors in 2017, and especially better than the still poorly positioned Bed Bath and Beyond as we head into the New Year.

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