Bed Bath & Beyond Stock Now 'Too Cheap to Ignore'

Bed Bath & Beyond, Inc. (BBBY) – the major retailer of products for the home including bed sheets, bath soaps and beyond to kitchenware – missed earnings estimates when the company reported earnings after the closing bell on Wednesday. The company reported earnings per share of 36 cents versus expectations of 50 cents. Sales were flat, and the company reported a same-store sales decline for the sixth consecutive quarter.

The stock crashed by 23% from its Sept. 26 close of $18.81 to its opening low of $14.40. The stock was already in a bear market at 21.9% below its 2018 high of $24.08 set on Jan. 24. Given the stock's P/E ratio of 8.29 and dividend yield of 3.40%, Bed, Bath & Beyond stock is "too cheap to ignore," and investors should consider buying shares on weakness to my quarterly value level of $14.54. (See also: Wall Street Slashes Outlook on Bed Bath & Beyond.)

The daily chart for Bed Bath & Beyond

Shares of Bed Bath & Beyond have been below a "death cross" since the week of June 16, 2015, when the stock closed at $69.68. A "death cross" occurs when the 50-day simple moving average falls below the 200-day simple moving average and indicates that lower prices lie ahead. Note that the stock failed at its 200-day simple moving average at $20.88 between July 6 and July 10 as an opportunity to reduce holdings. There are three horizontal lines on this chart. From top to bottom, they are my semiannual risky level of $24.73, my monthly pivot of $17.05 and my quarterly value level of $14.54.

The weekly chart for Bed Bath & Beyond

The weekly chart for Bed Bath & Beyond will likely end this week negative, with the stock below its five-week modified moving average of $17.84. The stock is well below its 200-week simple moving average at $42.75, which is the stock's "reversion to the mean," last crossed during the week of July 24, 2015, when the average was $66.93. The 12 x 3 x 3 weekly slow stochastic reading is projected to end this week at 23.53, slipping from 23.61 on Sept. 21.

Given these charts and analysis, investors should consider buying Bed Bath & Beyond stock on weakness to my quarterly value level at $14.54 and reduce holdings on strength to my monthly pivot of $17.05. (For more, see: Bed Bath & Beyond Playing Catchup in E-Commerce.)