Why Bed Bath & Beyond Inc. Stock Plunged Today

By Steve Symington Markets Fool.com

Image source: Bed Bath & Beyond Inc.

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What happened

Shares of Bed Bath & Beyond Inc. (NASDAQ: BBBY) were down 9.9% as of 3:30 p.m. EST Wednesday after the specialty retailer announced weaker-than-expected fiscal third-quarter 2016 results.

So what

Quartelry revenue fell 0.1% year over year, to $2.96 billion, as more than 20% growth from customer-facing digital channels was more than offset by low single-digit percent declines in comparable sales from stores. On the bottom line, that translated to net earnings of $126.4 million, or $0.85 per diluted share, down from $177.8 million, or $1.09 per share in last year's fiscal Q3.

By comparison -- and though we don't typically pay close attention to Wall Street's quarterly demands -- analysts' consensus estimates predicted Bed Bath & Beyond would achieve higher revenue of $3.01 billion, and earnings of $0.98 per share.

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Now what

As such, Bed Bath & Beyond now anticipates full fiscal 2016 earnings per diluted share will be at the low end of the $4.50 to (just over) $5.00 range it told investors to expect last quarter. Bed Bath & Beyond also noted that its earnings have fallen within that range "over the past several years, during a heavy investment phase."

That's not to say Bed Bath & Beyond's results were as jaw-droppingly bad as today's plunge seems to indicate. And with shares now trading at around 9 times this year's expected earnings, perhaps value-seeking investors might be enticed to take advantage. But given Bed Bath & Beyond's underwhelming performance, it's no surprise to see investors taking a step back today.

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Steve Symington has no position in any stocks mentioned. The Motley Fool recommends Bed Bath and Beyond. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.