Earnings Preview: Best Buy is looking at a beat

Best Buy Co. Inc. (BBY) is scheduled to report its second quarter 2019 earnings results on August 28. For the first quarter, Best Buy reported a growth in revenues and earnings, which beat market expectations. Adjusted earnings grew 37%, benefiting from the sales increase and tax benefits. Comp sales saw a growth of 7% last quarter, while margins were pressured partly by higher expenses.

For the second quarter of 2019, Best Buy guided for revenues of between $9.1 billion and $9.2 billion and for adjusted EPS of $0.77 to $0.82. The company expects comp store sales to increase 3% to 4% for the second quarter.

For the full year of 2019, Best Buy expects revenues of $41 billion to $42 billion and adjusted EPS of $4.5 to $5, with a comp store sales growth of 2%.

Best Buy has a track record of exceeding market expectations on earnings and analysts expect the retailer to report adjusted EPS of $0.82, reflecting a year-over-year growth of over 18%, along with revenues of $9.2 billion, up over 3% from the prior-year period.

A shift into healthcare with the GreatCall acquisition is expected to provide relief from weakening electronic sales

Last week, Best Buy announced its acquisition of senior healthcare services provider GreatCall for $800 million. The deal, which is said to be the largest in the retailer’s history, is expected to close in Q3 2019 and to be accretive to profits by 2021.

This acquisition is believed to be a good move for the company as a shift into the healthcare space will provide some relief from the weakness in electronic sales. The stock climbed around 3% at the time of the deal announcement.

Best Buy’s shares climbed 20% year-to-date and 8% over the past three months. This quarter could turn out to be positive for Best Buy and the company is likely to beat expectations this time too.

Related: Best Buy dabbles into healthcare space with GreatCall acquisition

Related: Best Buy Q1 2019 Earnings Infographic