Download PDF

1. Company Snapshot

1.a. Company Description

Best Buy Co., Inc.retails technology products in the United States and Canada.The company operates in two segments, Domestic and International.


Its stores provide computing products, such as desktops, notebooks, and peripherals; mobile phones comprising related mobile network carrier commissions; networking products; tablets covering e-readers; smartwatches; and consumer electronics consisting of digital imaging, health and fitness, home theater, portable audio comprising headphones and portable speakers, and smart home products.The company's stores also offer appliances, such as dishwashers, laundry, ovens, refrigerators, blenders, coffee makers, and vacuums; entertainment products consisting of drones, peripherals, movies, music, and toys, as well as gaming hardware and software, and virtual reality and other software products; and other products, such as baby, food and beverage, luggage, outdoor living, and sporting goods.In addition, it provides consultation, delivery, design, health-related, installation, memberships, repair, set-up, technical support, and warranty-related services.


The company offers its products through stores and websites under the Best Buy, Best Buy Ads, Best Buy Business, Best Buy Health, CST, Current Health, Geek Squad, Lively, Magnolia, Best Buy Mobile, Pacific Kitchen, Home, and Yardbird, as well as domain names bestbuy.com, currenthealth.com, lively.com, yardbird.com, and bestbuy.ca.As of January 30, 2022, it had 1,144 stores.The company was formerly known as Sound of Music, Inc.


The company was incorporated in 1966 and is headquartered in Richfield, Minnesota.

Show Full description

1.b. Last Insights on BBY

Best Buy Co., Inc.'s recent performance was negatively impacted by weak differentiation, slow adaptability, and lack of near-term catalysts. Despite solid financials, the company's Q4 earnings showed flat revenue and minimal comparable sales growth. A "Sell" rating was assigned due to these concerns. However, recent Q4 earnings beat and growth in Ads and Marketplace helped cushion softer sales. A leaner cost structure also drove a post-earnings rally. Institutional investors, such as Assenagon Asset Management S.A. and Ethic Inc., have reduced their stakes in the company.

1.c. Company Highlights

2. Best Buy's Q4 Earnings: A Mixed Bag

Best Buy reported revenue of $13.8 billion, a 1% decrease from the previous year, with an adjusted operating income rate of 5% and adjusted earnings per share of $2.61, a 1% increase from the previous year. The company's earnings per share beat analysts' estimates of $2.48, coming in at $2.61. The gross profit rate was 20.9% in the domestic segment, flat from the previous year, driven by growth in ads and marketplace commissions, offset by lower product margin rates.

Publication Date: Mar -04

📋 Highlights
  • Profitability Beat:: Q4 adjusted operating income rate of 5% and EPS of $2.61, both up 10 bps and 1% respectively from prior year, outperformed expectations despite 0.8% comp sales decline.
  • Computing Growth:: Eighth consecutive quarter of positive computing sales growth (laptops, desktops, accessories), driven by replacement cycles and AI innovation, offsetting declines in home theater/appliances (-1.1% domestic revenue).
  • Ads & Marketplace Momentum:: Gross advertising collections rose >7% YoY and marketplace GMV reached $300M in Q4, contributing to flat domestic gross profit rate (20.9%) despite lower product margins from promotions.
  • 2027 Guidance:: Revenue of $41.2–42.1B, comp sales of -1% to +1%, and EPS of $6.30–6.60, with computing growth expected from Windows 10 end-of-life and AI, but risks from memory cost inflation and inventory constraints.
  • Dividend & Share Buybacks:: Annualized dividend increased to $3.84/share (1% hike), with $300M in planned 2027 buybacks (primarily Q4), and $1.1B returned to shareholders in 2026 via dividends and repurchases.

Segment Performance

The domestic segment revenue decreased 1.1% to $12.6 billion, driven by a comparable sales decline of 0.8%. Computing and mobile phones were the bright spots, with growth driven by industry momentum and new carrier labor models. International revenue increased 0.5% to $1.2 billion, driven by the favorable impact of foreign exchange rates.

Guidance and Outlook

Best Buy guided comparable sales growth in the range of down 1% to up 1% for fiscal 2027, with an adjusted operating income rate of approximately 4.3% to 4.4%. The company expects continued growth in computing, driven by industry momentum and innovation driven by AI. The guidance implies a revenue growth rate of around 1.0%, in line with analysts' estimates.

Valuation and Dividend Yield

With a P/E Ratio of 13.02 and a Dividend Yield of 5.76%, Best Buy's valuation appears reasonable. The company's ROE of 36.79% and ROIC of 13.84% indicate strong profitability. The EV/EBITDA ratio of 11.7 suggests that the company's enterprise value is reasonable relative to its earnings before interest, taxes, depreciation, and amortization.

Operational Highlights

Best Buy is focusing on improving its customer experience, with investments in customer-facing labor and digital experience. The company's ads and marketplace business is growing, with gross advertising collections up more than 7% versus last year. The services offerings, including Geek Squad, remain a key differentiator, with a focus on simplifying the portfolio and making services accessible to more customers.

3. NewsRoom

Card image cap

3 Retail Stocks to Watch for a Post-Tax-Day Bump

Apr -13

Source: marketbeat.com

Card image cap

Best Buy Stock Gets Double Downgrade to Sell. Why Goldman Says Sell.

Apr -13

Source:

Card image cap

Goldman Sachs Double Downgrades Best Buy to Sell as Memory Cost Headwinds Threaten Margins

Apr -13

Source: 247wallst.com

Card image cap

Analyst: High Memory Costs Pose Risk to Best Buy Stock

Apr -13

Source: schaeffersresearch.com

Card image cap

Monday's Morning Movers: BBY Double Downgrade, SBUX & STZ Upgrades

Apr -13

Source: youtube.com

Card image cap

Dow Futures Down 500 Points as Oil Prices Reclaim $100

Apr -13

Source: schaeffersresearch.com

Card image cap

Here Are Monday’s Top Wall Street Analyst Research Calls: Adobe, Best Buy, Bilibili, Constellation Brands, CoreWeave, Nike, Starbucks, T-Mobile, and More

Apr -13

Source: 247wallst.com

Card image cap

These Companies Pay 5% Dividend Yields and Are Raising Them Too

Apr -08

Source: barrons.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.56%)

6. Segments

Domestic

Expected Growth: 4.5%

The domestic segment of Best Buy Co., Inc. is expected to grow driven by increasing demand for consumer electronics, particularly smart home devices and 5G-enabled products. Additionally, the company's efforts to enhance its online shopping experience and invest in data analytics to personalize customer interactions are expected to contribute to growth.

International

Expected Growth: 5.3%

Best Buy International's growth is driven by increasing demand for consumer electronics, expansion of e-commerce platforms, and strategic partnerships in Canada and Mexico, as well as the company's efforts to enhance customer experience and improve operational efficiency.

7. Detailed Products

TVs and Audio

Best Buy offers a wide range of TVs from top brands like Samsung, LG, and Sony, as well as audio equipment such as soundbars, speakers, and headphones.

Computers and Tablets

Best Buy sells laptops, desktops, and tablets from popular brands like Apple, HP, and Lenovo, along with accessories like keyboards, mice, and cases.

Smartphones

Best Buy offers a variety of smartphones from top brands like Apple, Samsung, and Google, along with accessories like cases, screen protectors, and headphones.

Gaming Consoles

Best Buy sells gaming consoles like PlayStation, Xbox, and Nintendo Switch, along with games, controllers, and accessories.

Appliances

Best Buy offers a range of home appliances like refrigerators, washing machines, and dishwashers from brands like Whirlpool, LG, and Samsung.

Cameras and Camcorders

Best Buy sells cameras, camcorders, and accessories like lenses, tripods, and memory cards from brands like Canon, Nikon, and Sony.

Health and Wellness

Best Buy offers a range of health and wellness products like fitness trackers, smartwatches, and air purifiers from brands like Fitbit, Garmin, and Dyson.

Services

Best Buy provides services like Geek Squad protection plans, installation services, and technical support for various products.

8. Best Buy Co., Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Best Buy faces moderate threat from substitutes as consumers have alternative options for purchasing electronics such as online marketplaces like Amazon, and specialty stores like Apple Stores.

Bargaining Power Of Customers

Best Buy's customers have high bargaining power due to the availability of alternative products and services, which enables them to negotiate prices and demand better services.

Bargaining Power Of Suppliers

Best Buy's suppliers have low bargaining power due to the company's large scale of operations and its ability to negotiate better prices with suppliers.

Threat Of New Entrants

The threat of new entrants is low for Best Buy due to the high barriers to entry in the retail electronics industry, including the need for significant capital investment and established relationships with suppliers.

Intensity Of Rivalry

The retail electronics industry is highly competitive, with Best Buy facing intense rivalry from other retailers such as Walmart, Target, and online marketplaces like Amazon.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 36.59%
Debt Cost 4.24%
Equity Weight 63.41%
Equity Cost 11.53%
WACC 8.86%
Leverage 57.71%

11. Quality Control: Best Buy Co., Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
GPC

A-Score: 5.6/10

Value: 3.7

Growth: 5.1

Quality: 4.2

Yield: 6.0

Momentum: 6.0

Volatility: 8.7

1-Year Total Return ->

View Full Report
Stock-Card
Casey's General Stores

A-Score: 5.5/10

Value: 2.9

Growth: 7.0

Quality: 5.4

Yield: 0.0

Momentum: 9.0

Volatility: 8.7

1-Year Total Return ->

View Full Report
Stock-Card
Williams-Sonoma

A-Score: 5.3/10

Value: 3.3

Growth: 7.1

Quality: 7.5

Yield: 3.0

Momentum: 6.0

Volatility: 5.0

1-Year Total Return ->

View Full Report
Stock-Card
DICK'S Sporting Goods

A-Score: 5.3/10

Value: 4.0

Growth: 6.7

Quality: 4.7

Yield: 5.0

Momentum: 6.0

Volatility: 5.3

1-Year Total Return ->

View Full Report
Stock-Card
Best Buy

A-Score: 5.1/10

Value: 5.0

Growth: 3.3

Quality: 4.5

Yield: 8.0

Momentum: 4.0

Volatility: 6.0

1-Year Total Return ->

View Full Report
Stock-Card
Murphy USA

A-Score: 4.0/10

Value: 3.9

Growth: 8.0

Quality: 4.1

Yield: 0.0

Momentum: 1.0

Volatility: 7.0

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

65.73$

Current Price

65.73$

Potential

-0.00%

Expected Cash-Flows