Bed Bath & Beyond (BBBY) is a retail stock investors should consider despite the company's recent profitability compression and poor results.
The company is still nicely profitable despite all of its recent challenges from Amazon (NASDAQ:AMZN) eating up market share to foot traffic declines in its brick and mortar business. Much of the recent margin pressure is due to management investing for the long term success of the company while ignoring the short term impact on profitability to some extent. Without a capital markets day, company road shows or even clear strategy discussions on results calls, investors are left largely in the dark in terms of where the company's current strategy is meant to lead in terms of margins, growth or number of store locations. While clearly a challenge, the lack of clarity can also be viewed as an opportunity as it potentially pushes the stock price down despite the underlying business being well positioned for the long term. In the meantime, the attractive valuation offers investors some protection on the downside while the company works through its challenges.
