Best Buy Co (BBY) AI Stock Analysis

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Best Buy Co

(NYSE:BBY)

59Neutral

Best Buy's overall stock score reflects challenges with declining revenue and profitability, increased financial risk due to higher leverage, and bearish technical indicators. However, the company's strong cash flow, fair valuation, and positive digital sales growth provide some support. Mixed sentiment from the earnings call, with concerns about tariffs and sales declines in specific categories, also influences the score.

Positive Factors

Earnings Performance

The report shows better-than-expected earnings per share for the fourth quarter, driven by strong performance in computing and tablets.

Gross Margin Expansion

BBY has company specific drivers to see gross margin expansion with marketplace and BBY ads.

Negative Factors

Consumer Sentiment

Uncertainty on consumer weakness is adding anxiety to the recovery.

Tariff Impact

A 20% tariff on Chinese goods could notably change the economics in regards to sourcing for vendors.

Best Buy Co (BBY) vs. S&P 500 (SPY)

Market Cap

$12.94B

Dividend Yield6.71%

Average Volume (3M)4.39M

Price to Earnings (P/E)14.3

Beta (1Y)1.03

Revenue Growth-4.43%

EPS Growth-24.58%

CountryUS

Employees85,000

SectorConsumer Cyclical

Sector Strength60

IndustrySpecialty Retail

Share Statistics

EPS (TTM)4.28

Shares Outstanding211,369,660

10 Day Avg. Volume4,674,645

30 Day Avg. Volume4,394,941

Financial Highlights & Ratios

PEG Ratio12.27

Price to Book (P/B)N/A

Price to Sales (P/S)0.37

Price to Cash Flow (P/CF)2.50

P/FCF Ratio2.50

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$90.35

Price Target Upside60.85% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering18

Best Buy Co Business Overview & Revenue Model

Company DescriptionBest Buy Co., Inc. is a leading North American retailer specializing in consumer electronics, appliances, and related services. The company operates a vast network of retail stores and an online platform, offering a wide range of products including televisions, computers, mobile phones, gaming consoles, and home appliances. Best Buy also provides services such as installation, repair, and technical support through its Geek Squad division. With a focus on delivering a comprehensive shopping experience, Best Buy caters to both individual consumers and commercial clients.

How the Company Makes MoneyBest Buy makes money primarily through the sale of consumer electronics and appliances, both in-store and online. The company generates revenue from its diverse product offerings, which include computing and mobile phones, home theater equipment, entertainment products, and appliances. Additionally, Best Buy earns income from its services segment, which includes warranties, installation, and repair services provided by its Geek Squad division. The company's business model is supported by strategic partnerships with leading technology brands, enabling it to offer exclusive products and promotions. Best Buy's revenue is also influenced by seasonal sales events, such as Black Friday and holiday shopping, which drive significant consumer traffic and sales volume.

Best Buy Co Financial Statement Overview

Summary

Best Buy has faced challenges with declining revenue and profitability, as evidenced by deteriorating net profit margins and EBIT/EBITDA margins. The balance sheet reveals increasing leverage and reduced returns on equity, posing financial risk. On a positive note, cash flow generation remains robust, supporting liquidity despite fluctuating capital expenditures.

Income Statement

Positive

Best Buy's revenue has experienced a declining trend over the past few years, with a negative growth rate from $51.76 billion in 2022 to $41.53 billion in 2025. The gross profit margin has been relatively stable, hovering around 22.6% in the most recent year. However, the net profit margin has decreased from 4.7% in 2022 to 2.2% in 2025, indicating shrinking profitability. EBIT and EBITDA margins have also declined, reflecting pressure on operating performance.

Balance Sheet

Neutral

The debt-to-equity ratio has shown a concerning increase, moving from 1.13 in 2021 to 1.44 in 2025, indicating higher leverage and financial risk. The return on equity (ROE) has decreased over the period, from 53.4% in 2022 to 33.0% in 2025, showing reduced returns for shareholders. The equity ratio has remained low, at around 19%, highlighting potential vulnerability in the capital structure.

Cash Flow

Positive

Operating cash flow has shown a positive trend, increasing from $2.56 billion in 2020 to $2.10 billion in 2025. Free cash flow has also improved significantly, with a notable spike in 2024. The free cash flow to net income ratio has been strong, reflecting efficient cash generation relative to earnings. However, fluctuations in capital expenditures and financing cash flows indicate potential volatility in future cash flow stability.

Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Breakdown
Income Statement		Total Revenue
41.53B	43.45B	46.30B	51.76B	47.26B
	Gross Profit
9.38B	9.60B	9.91B	11.64B	10.57B
	EBIT
1.26B	1.57B	1.79B	3.04B	2.39B
	EBITDA
1.26B	2.60B	2.86B	3.88B	3.51B
	Net Income Common Stockholders
927.00M	1.24B	1.42B	2.45B	1.80B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.58B	1.45B	1.87B	2.94B	5.49B
	Total Assets
14.78B	14.97B	15.80B	17.50B	19.07B
	Total Debt
4.05B	3.98B	3.98B	3.94B	4.08B
	Net Debt
2.48B	2.54B	2.10B	1.00B	-1.41B
	Total Liabilities
11.97B	11.91B	13.01B	14.48B	14.48B
	Stockholders Equity
2.81B	3.05B	2.79B	3.02B	4.59B
Cash Flow		Free Cash Flow
1.39B	675.00M	894.00M	2.52B	4.21B
	Operating Cash Flow
2.10B	1.47B	1.82B	3.25B	4.93B
	Investing Cash Flow
-704.00M	-781.00M	-962.00M	-1.37B	-788.00M
	Financing Cash Flow
-1.31B	-1.14B	-1.81B	-4.30B	-876.00M

Best Buy Co Technical Analysis

Technical Analysis Sentiment

Negative

Last Price56.17

Price Trends

50DMA

79.03

Negative

100DMA

82.22

Negative

200DMA

85.42

Negative

Market Momentum

MACD

-2.19

Negative

RSI

43.74

Neutral

STOCH

48.47

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For BBY, the sentiment is Negative. The current price of 56.17 is below the 20-day moving average (MA) of 70.51, below the 50-day MA of 79.03, and below the 200-day MA of 85.42, indicating a bearish trend. The MACD of -2.19 indicates Negative momentum. The RSI at 43.74 is Neutral, neither overbought nor oversold. The STOCH value of 48.47 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for BBY.

Best Buy Co Risk Analysis

Best Buy Co disclosed 29 risk factors in its most recent earnings report. Best Buy Co reported the most risks in the “Production” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Best Buy Co Peers Comparison

Overall Rating

UnderperformOutperform

Sector (59)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
VIPS	78 Outperform	$6.88B	6.72	20.12%	3.06%	-5.47%	-2.19%
WSM	66 Neutral	$17.92B	16.51	53.91%	1.57%	-0.50%	24.11%
DG	65 Neutral	$20.24B	17.99	15.89%	2.56%	4.96%	-32.41%
DLTR	61 Neutral	$15.67B	―	18.88%	―	-9.88%	-205.57%
BBY	59 Neutral	$12.94B	14.31	31.63%	6.71%	-4.43%	-24.58%
Sector *	59 Neutral	$10.97B	9.83	-1.56%	4.06%	1.31%	-16.49%
GME	54 Neutral	$10.86B	88.06	4.19%	―	-27.50%	1150.23%

* Consumer Cyclical Sector Average

Performance Comparison

BBY

Best Buy Co

56.17

-20.36

-26.60%

Dollar General

87.70

-63.96

-42.17%

DLTR

Dollar Tree

72.57

-56.16

-43.63%

GME

GameStop

23.39

12.54

115.58%

VIPS

Vipshop

12.71

-4.33

-25.41%

WSM

Williams-Sonoma

139.21

-5.27

-3.65%

Best Buy Co Earnings Call Summary

Earnings Call Date: Mar 4, 2025 | % Change Since: -34.42% | Next Earnings Date: May 21, 2025

Earnings Call Sentiment Neutral

The earnings call reflects a mixed sentiment with several positive outcomes such as better-than-expected sales and earnings, strong digital sales, and growth in computing and tablets. However, these are counterbalanced by challenges such as sales declines in specific categories, concerns about the impact of tariffs, and a significant impairment charge for Best Buy Health. The company is optimistic about future growth and strategic initiatives but faces uncertainties in the macroeconomic environment.

Highlights

Better-than-Expected Sales and Earnings

Best Buy reported both better-than-expected sales and earnings for the fourth quarter with enterprise comparable sales growth of 0.5% and revenue of almost $14 billion.

Improved Operating Income Rate

The company delivered an adjusted operating income rate of 4.9%, with a 20 basis points annual adjusted operating income rate expansion on a 2.3% comparable sales decline.

Strong Digital Sales and App Engagement

Digital sales comprised almost 40% of total domestic sales, with the Best Buy app achieving the #1 ranked shopping app position on the Apple App Store on Black Friday, seeing almost 20% traffic growth.

Growth in Computing and Tablets

Best Buy reported better-than-expected domestic comparable sales growth of 9% in the combined computing and tablet categories, with laptop sales growth increasing to 10%.

Improved Customer and Employee Engagement

Enhanced vendor experiences and labor enhancements contributed to a material year-over-year improvement in Net Promoter Score and the lowest employee turnover metrics in 6 years.

Lowlights

Sales Declines in Certain Categories

Sales growth in computing and tablets was partially offset by declines in appliances, home theater, and gaming categories.

Tariff Concerns and Uncertainty

Recent tariffs enacted on Chinese imports pose a potential negative impact of around 1 point on comparable sales, with ongoing uncertainty about their duration and impact.

Goodwill Impairment Charge

Best Buy recorded a goodwill impairment related to Best Buy Health totaling $475 million, reflecting downward revisions in longer-term projections.

Company Guidance

During Best Buy's Fourth Quarter Fiscal 2025 Earnings Call, the company reported nearly $14 billion in revenue with an adjusted operating income rate of 4.9% and adjusted earnings per share of $2.58. Despite a 2.3% decline in comparable sales, they achieved a 20 basis point increase in annual adjusted operating income rate. Digital sales accounted for almost 40% of total domestic sales, with a 20% growth in app traffic. The company saw substantial growth in computing and tablets, with domestic comparable sales growth of 9% in these categories. Additionally, laptop sales increased by 10% compared to 7% in Q3. Best Buy's fiscal 2026 priorities include driving omnichannel experience improvements, launching and scaling profit streams like Best Buy Marketplace and Best Buy Ads, and enhancing operational effectiveness to fund strategic investments. The company anticipates enterprise revenue between $41.4 billion and $42.2 billion, with comparable sales growth of flat to 2%. They expect gross profit rates to range from flat to an increase of 20 basis points, with capital expenditures projected at $700 million to $750 million.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.