On the last day of what has been perhaps the most volatile trading week to begin the new year in a very long time, Bed Bath & Beyond Inc. (NASDAQ:BBBY), PriceSmart, Inc. (NASDAQ:PSMT), Container Store Group Inc (NYSE:TCS), and Acuity Brands, Inc. (NYSE:AYI) are each trending on the back of their financial reports for the last quarter. Let’s take a closer look at the results delivered by these companies.
In addition, let’s analyze hedge fund sentiment toward these stocks, if relevant. Most investors don’t understand hedge funds and indicators that are based on hedge funds’ activities. They ignore hedge funds because of their recent poor performance in the bull market. Our research indicates that hedge funds underperformed because they aren’t 100% long. Hedge fund fees are also very large compared to the returns generated and they reduce the net returns experienced by investors. We uncovered that hedge funds’ long positions actually outperformed the market. For instance the 15 most popular small-cap stocks among funds beat the S&P 500 Index by 52 percentage points since the end of August 2012. These stocks returned a cumulative of 102% vs. a 48.6% gain for the S&P 500 Index (see the details here). That’s why we believe investors should pay attention to what hedge funds are buying (rather than what their net returns are).
Bed Bath & Beyond Inc. (NASDAQ:BBBY) shares have seesawed between red and green after the company reported mixed results for the third quarter of fiscal 2015. Although the company’s earnings met analyst expectations of $1.09 per share, the retailer’s sales missed revenue estimates by $20 million, coming in at $2.95 billion. Comparable sales dropped by 0.4% in the quarter due to the strong dollar (the metric is flat on a constant currency basis) and guidance is for comparable sales to be between flat and 2.0% for the fiscal fourth quarter. The company estimates its EPS will be between $1.72 to $1.86 in the same time period.
The good news is that although top line growth is difficult to come by, Bed Bath & Beyond Inc. (NASDAQ:BBBY) is buying back shares. The company bought back $194 million of its common stock in the quarter, and expects to commence repurchases under the new $2.5 billion authorization approved by the company’s board beginning in the fourth quarter. Shares of the stock trade at under 9 times forward earnings.
PriceSmart, Inc. (NASDAQ:PSMT) disappointed its investors today after it released soft first-quarter earnings of $0.78 per share on revenues of $711.93 million. Although revenue jumped by 8.5% year-over-year, PriceSmart’s sales missed analyst estimates by $4.89 million and its earnings per share came in $0.05 short of expectations. Of the around 730 elite funds we track, 12 funds owned $47.79 million worth of PriceSmart, Inc. (NASDAQ:PSMT) shares (accounting for 2.10% of the float) on September 30, versus nine funds and $58.7 million, respectively, on June 30. Among the bullish funds in the membership shopping warehouse club retailer is Joel Greenblatt’s Gotham Asset Management with a holding of 125,996 shares at the end of the third quarter. Shares of the stock are off by 5.4% in morning trading.
On the next page, we examine Container Store Group, and Acuity Brands.