Bed Bath & Beyond (NASDAQ: BBBY) a member of The Value Investor Report since 3 July 2014 announced earlier in the week that for the latest quarter profit fell 4%.
But here are the reason why I’ll still hold this stock against a backdrop of fearful selling by weak longs who got spooked by the numbers:
- Sales rose 4.2%
- Comparable sales grew 3.7%
- Net sales for the full fiscal year rose 3.3%
These are nice numbers in an environment where shoppers have become discerning to the extreme and the weak longs were no doubt motivated to dump their stock because all of these numbers came in below the market’s expectations.
I’ve never been arsed about what the market expects or does not expect in regard to a stock’s numbers.
All I care about is how well the business is being run, how good/bad are shareholders being treated and is the current share price below where my own calculation of intrinsic value is.
Also in the fourth quarter BBBY repurchased $947 million of stock and the weighted diluted share count was reduced by 14.4% on a year by year basis.
Bed Bath & Beyond still has $884 million left to spend on share repurchases so for the short term shareholders will still be treated to a boost in the value of their holdings.
The question remains though: what will happen after their buyback program finishes? It could spell the end of increased earnings. It could mean that the even weaker longs will decide to sell stock. Only time will tell since BBBY cannot buy it’s way to good numbers forever.
I’ll be keeping a close eye on this one.