Best Buy Stock (BBY) Gaps Up on Earnings Beat
Electronics retailer Best Buy (BBY) reported significantly better-than-expected fourth-quarter earnings and revenue on Wednesday morning. Shares of Best Buy gapped up and surged more than 17% at one point on Wednesday to hit a high of $70.73 due to the earnings beat. The stock ended the day at $68.82, up 14% from Tuesday’s close.
Best Buy Earnings
The retail giant reported fourth-quarter earnings of $2.72/share (excluding one-time items) and revenue of $14.8 billion, both above analysts’ estimates. The company also stated that its stores saw brisk sales during the 2018 holiday season, particularly for electronic accessories used to play what may be the most popular video game ever – Fortnite. Further fueling investors’ appetite for the stock, Best Buy also announced on Wednesday that it would be raising its quarterly dividend from $0.45 to $0.50, a full 11%.
Best Buy Technicals
As shown on the chart above, Best Buy stock had been on a sharp decline from August to late-December of last year. Like the overall market, however, BBY made a sharp reversal around Christmas, staging a strong rebound and recovery that has endured to this day.
Wednesday’s post-earnings market open saw a rare and sizable gap-up that hit the stock’s 200-day moving average, just short of the $70 level. In addition, volume was exceptionally high for most of the day.
Looking ahead from a technical perspective, this 200-day moving average will be critical in determining whether BBY will be able to sustain its earnings-driven rally. Any strong breakout and sustained move above the 200-day would confirm the return of a bull market for Best Buy. But any reaction move back below the 200-day could signal a false breakout and resumption of the recent bearish trend.
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Disclosure: At the time of this article’s publication, we have no position in any security or trade/investment mentioned, nor do we have any business relationship with any company whose stock may be mentioned.
Chief Market Strategist at The Technicals
With more than two decades of experience as an equity analyst for several major research firms, Don has covered individual stocks (both technically and fundamentally) across a wide variety of sectors and industries, including tech, financial, and retail. He has been quoted regularly in key financial media like Bloomberg and Reuters. Contact Don