Why Bed Bath & Beyond Stock Remains an Undervalued Opportunity
Explore why Bed Bath & Beyond, a traditional retail giant, continues to offer an attractive investment with a low P/E ratio and a solid dividend yield.
Bed Bath & Beyond Inc. (BBBY) stands as a prominent retailer specializing in home essentials, ranging from bedding and bath products to kitchenware and more. The stock reached its peak in January 2014, hitting an intraday high of $80.82, followed by a secondary high of $79.64 in January 2015. However, since those highs, the stock has experienced a significant decline, touching a low of $19.07 on November 7.
As of Tuesday afternoon, the stock was trading at $21.14, reflecting a 3.9% decrease year-to-date and positioned in correction territory—12.2% below its 2018 high of $24.08 recorded on January 24. Notably, the stock has rebounded 6.6% from its 2018 low of $19.84.
Market analysts anticipate Bed Bath & Beyond to report earnings per share between $1.37 and $1.41 following the market close on April 11. Key performance indicators to watch include same-store sales, profit margins, and the company’s guidance for the remainder of the year. Investors are also keen to see how the retailer is expanding its online shopping platform to stay competitive in today's digital marketplace. Given the stock’s attractive price-to-earnings ratio of 5.98 and a dividend yield of 2.88%, it presents a compelling risk-reward profile.
Examining the daily chart reveals that Bed Bath & Beyond has been trading below a "death cross" since mid-June 2015—a bearish signal indicating potential for further price declines. Currently, the stock is trading beneath both its 50-day simple moving average of $21.76 and its 200-day simple moving average of $24.04, with this week's pivot point at $21.73.
Chart provided by MetaStock Xenith
On a weekly basis, the stock’s outlook remains negative, trading below its five-week modified moving average of $21.57 and significantly under its 200-week simple moving average of $48.30, a level considered the stock’s long-term mean reversion point. The last time the stock crossed this average was in late July 2015 when it was approximately $66.93. The weekly slow stochastic indicator also points downward, with a projected reading of 36.51 for the week, down from 40.46 earlier in April.
Chart provided by MetaStock Xenith
Considering these technical insights and fundamental data, investors might find value in acquiring shares with the expectation that the stock price will surpass the weekly pivot point of $21.73. The logical target for profit-taking on strength would be near the 200-day simple moving average at $24.04. For additional insights, readers can refer to The Four R's of Retail.
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