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Best Buy Co (BBY)
NYSE:BBY
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Best Buy Co
(NYSE:BBY)
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Rating:51Neutral
Price Target:
$62.00
▼(-0.99% Downside)
Action:ReiteratedDate:03/03/26
BBY scores 51 mainly due to pressured financial performance (sharp TTM revenue decline and thinner profitability) and weak technical setup (below key moving averages with negative momentum). The high dividend supports valuation, and the latest call points to modest gross margin tailwinds from ads/marketplace, but guidance implies continued near-term margin pressure and elevated uncertainty.
Positive Factors
Marketplace & Ads Growth
Expanding marketplace and ad businesses diversify revenue away from low‑margin hardware cycles and contribute higher gross profit. Scale in ads/marketplace creates recurring, higher‑margin streams that can sustainably boost gross profit rate and improve long‑run operating leverage.
Consistent Cash Generation
Material positive free cash flow and operating cash flow provide durable capacity to fund capex, ads/marketplace investments, dividends and buybacks while absorbing cyclical revenue dips. Healthy cash conversion underpins strategic flexibility over the next several quarters.
Omnichannel & Fulfillment Strength
Improving customer experience and fast fulfillment strengthen Best Buy's differentiated omnichannel proposition, supporting retention and share gains. Superior service and logistics efficiency are durable advantages that help defend margins and sales across cycles.
Negative Factors
Top‑Line Decline
A large, sustained revenue decline materially reduces operating leverage and long‑term earnings power. Even with steady gross margins, compressed net and EBIT margins imply less cash generation and weaker ability to fund investments without cutting returns or raising leverage.
Moderate Leverage
Debt roughly 1.5x equity limits financial flexibility if profitability weakens. Moderate leverage increases interest and covenant sensitivity, constraining capacity for opportunistic M&A or larger buybacks and raising execution risk if cash flow deteriorates under prolonged revenue pressure.
Category & Supply Headwinds
Persistent component cost inflation and supply volatility can force promotions, depress unit sales and erode margins in computing and other categories. These structural supply‑chain and input‑cost risks could persist for quarters, weakening mix and profitability despite operational fixes.
Best Buy Co (BBY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$13.12B
Dividend Yield5.46%
Average Volume (3M)4.96M
Price to Earnings (P/E)12.8
Beta (1Y)1.05
Revenue Growth-0.95%
EPS Growth-48.28%
CountryUS
Employees85,000
SectorConsumer Cyclical
Sector Strength84
IndustrySpecialty Retail
Share Statistics
EPS (TTM)2.61
Shares Outstanding209,535,110
10 Day Avg. Volume6,486,589
30 Day Avg. Volume4,955,870
Financial Highlights & Ratios
PEG Ratio0.74
Price to Book (P/B)4.63
Price to Sales (P/S)0.33
P/FCF Ratio10.92
Enterprise Value/Market Cap1.19
Enterprise Value/Revenue0.37
Enterprise Value/Gross Profit1.67
Enterprise Value/Ebitda7.48
Forecast
1Y Price Target
$74.00Price Target Upside18.17% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering15
EPS Forecast (FY)6.52
Revenue Forecast (FY)$41.80B
Best Buy Co Business Overview & Revenue Model
Company DescriptionBest 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.
How the Company Makes MoneyBest Buy generates revenue primarily through the sale of consumer electronics, appliances, and related services. The company's key revenue streams include product sales from its retail stores and e-commerce platform, as well as service revenues from Geek Squad and warranty plans. Best Buy's partnerships with major electronics manufacturers allow it to offer a diverse range of products, while its omnichannel strategy enhances customer accessibility and convenience. Additionally, the company benefits from its ability to leverage its loyalty program, which encourages repeat purchases and customer retention, contributing to its overall earnings.
Best Buy Co Key Performance Indicators (KPIs)
Any
Revenue by Geography
Breaks down revenue across different regions, revealing where the company is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.
Breaks down revenue across different regions, revealing where the company is strongest and where it may face risk or growth potential due to local economic conditions or market share shifts.
Data provided by:
The Fly
The FlyBest Buy Co Earnings Call Summary
Earnings Call Date:Mar 03, 2026
(Q4-2026)
| % Change Since: |
Next Earnings Date:May 27, 2026
Earnings Call Sentiment Neutral
The call presented a balanced picture: management highlighted resilient profitability, improved customer experience metrics, momentum in computing, mobile and emerging categories, and clear progress scaling marketplace and ads (which are beginning to contribute to gross profit). At the same time, near-term top-line softness (Q4 comps down 0.8% and revenue down 1%), category pressures (home theater and appliances), international margin weakness, and material near-term uncertainty from memory-component cost inflation and a promotional industry environment temper the outlook. Fiscal 2027 is framed as an investment year where ads and marketplace growth should support gross profit expansion, but operating margin is guided lower versus the Q4 run-rate while investments scale.Q4-2026 Updates
Positive Updates
Q4 Profitability Beat
Reported Q4 revenue of $13,800,000,000 with an adjusted operating income rate of 5% (up 10 basis points year-over-year) and adjusted EPS of $2.61 (up 1% YoY), described as better-than-expected profitability for the quarter.
Strong Customer Experience and Fulfillment
Relationship NPS materially improved year-over-year to the highest level in 11 consecutive quarters; Q4 online fulfillment reached a record pace with 70% of online purchases fulfilled within two days.
Computing and Mobile Growth
Delivered the eighth consecutive quarter of positive comparable sales in computing and the fourth consecutive quarter of growth in mobile phones, driven by laptops/desktops/accessories and expanded carrier partnerships.
Marketplace and Ads Scale
U.S. marketplace GMV reached approximately $300,000,000 in Q4; enrolled over 1,100 sellers with >90% of storefront sellers seeing weekly sales; gross advertising collections for fiscal 2026 were just over $900,000,000 (up >7% YoY) with first-party ad investment up ~16% YoY.
Gross Profit Tailwinds from New Profit Streams
Management expects gross profit rate to improve ~30 basis points in fiscal 2027 driven by growth in ads and the U.S. marketplace, with ongoing investments planned to scale these profit streams.
Capital Allocation and Shareholder Returns
Returned $1,100,000,000 to shareholders in fiscal 2026 via dividends and buybacks; announced a 1% increase in the quarterly dividend to $0.96 (13th consecutive year of raises) and plans approximately $300,000,000 of share repurchases in fiscal 2027.
Operational Discipline and Efficiency Actions
Domestic adjusted SG&A decreased $36,000,000 in Q4 driven by lower compensation and health expenses; company highlighted ongoing cost-efficiency programs in supply chain, customer care and reverse logistics.
New-Store and Merchandising Plans
Plans to open six new domestic stores (first new-store growth in >10 years), reposition floor plans in ~70 stores to drive higher-value assortments, and continue vendor-led immersive merchandising rollouts.
Negative Updates
Comparable Sales and Revenue Softness
Q4 enterprise comparable sales declined 0.8% year-over-year (within guidance) and enterprise revenue decreased 1% versus prior year; domestic revenue decreased 1.1% to $12,600,000,000.
Online and International Pressure
Domestic online revenue of $4,900,000,000 decreased 2.3% on a comparable basis (representing 39% of domestic revenue); international comparable sales declined 1.3% and international gross profit rate fell 90 basis points to 20.5% (international revenue +0.5% largely due to FX).
Category Weaknesses: Home Theater and Appliances
Home theater and appliances were primary contributors to comparable sales declines in Q4; appliances described as a tough environment with low remodel activity, high duress replacement demand, and promotional dynamics that have not driven growth.
Memory Cost Inflation and Supply Uncertainty
Management flagged significant memory-component-driven cost inflation and supply uncertainty (particularly in computing) that could impact unit sales, promotions and category mix; mitigation actions are underway but risks remain for fiscal 2027.
Promotional Environment and Timing Headwinds
Holiday-quarter demand was softer than modeled with weaker November/December and strong late-December/January—company noted an overall very promotional environment and more promotionality than expected, which pressured margins and mix.
Lower Operating Income Guidance for FY2027
Fiscal 2027 guidance implies an adjusted operating income rate of approximately 4.3%–4.4% (below Q4 run-rate of 5%), reflecting planned continued investments in ads, marketplace, technology and headcount.
TV and Gaming Challenges
Big-screen TV revenue and units were below expectations in Q4 (industry softness noted), and gaming growth slowed compared with prior quarters (though still positive), with some category lapping effects ahead.
Investment-Year SG&A Pressure
Planned SG&A increases to support ads and marketplace (advertising, technology, employee compensation) and higher incentive compensation (guidance assumes up to ~$30,000,000 increase at the high end), meaning near-term margin pressure before scale benefits materialize.
Company Guidance
Best Buy guided fiscal 2027 to revenue of $41.2–$42.1 billion, comparable sales of down 1% to up 1%, an adjusted operating income rate of ~4.3%–4.4%, an adjusted effective tax rate of ~25.5%, and adjusted diluted EPS of $6.30–$6.60; planned capital expenditures are ≈$750 million and share repurchases ≈$300 million (primarily in Q4). Management expects gross profit rate to improve ~30 basis points YoY driven by ads and marketplace (FY26 ad collections were just over $900 million and ads are expected to grow ~10% in FY27; marketplace Q4 GMV ≈$300 million), with FY27 the last major investment year before larger operating income contributions in FY28–29. For Q1 they expect comparable sales ≈+1% (February ≈‑1% with March/April stronger) and an adjusted operating income rate of ≈3.9% (≈10 bps YoY improvement driven by gross margin expansion); SG&A assumes incremental investments for ads/marketplace with the high end including ~$30 million more incentive compensation while the low end could entail further variable expense reductions (including roughly $100 million of incentive compensation at a ‑1% sales outcome). They also plan six new domestic stores (net of two closures), capex of ≈$750M, and expect vendor‑provided labor to grow after a ~20% increase in 2H FY26.Best Buy Co Financial Statement Overview
Summary
Financial profile is stable but pressured: the income statement is weakened by sharp TTM revenue decline and margin compression (Income Statement Score 46), while leverage is moderate (Balance Sheet Score 55) and cash generation remains positive but trending down with weaker cash conversion (Cash Flow Score 52).Income Statement
BBY’s TTM (Trailing-Twelve-Months) results show meaningful top-line pressure, with revenue down ~32% versus the prior period provided, and profitability has compressed as well (net margin ~1.5% vs ~2.2% in the last annual report and ~4.7% in 2022). Gross margin has held relatively steady around the low-22% range, but operating profitability is thinner (EBIT margin ~2.3% TTM), suggesting weaker expense leverage and/or heavier competitive pricing. Overall, the business remains profitable, but the recent revenue decline and margin compression materially weaken income statement quality.46
Neutral
Balance Sheet
The balance sheet looks workable but moderately leveraged. Total debt in TTM (Trailing-Twelve-Months) is about $4.1B against ~$3.5B of equity, with debt running around 1.5x equity—higher than 2021 but broadly in line with the last several years. Returns on equity remain solid (mid-20% TTM), although down from the unusually high levels seen earlier in the period, indicating profitability is still supportive but not as strong as before. Key risk is that leverage is not low, so continued earnings pressure would reduce flexibility.55
Neutral
Cash Flow
Cash generation remains positive, with TTM (Trailing-Twelve-Months) operating cash flow (~$2.0B) and free cash flow (~$1.3B) still meaningful. However, free cash flow is down (~17% growth rate shown as negative), and cash conversion is weaker: free cash flow is only ~0.68x net income, implying less earnings-to-cash efficiency than in stronger years (when free cash flow exceeded ~0.77–0.86x net income). Overall, cash flow is supportive but trending in the wrong direction alongside the profitability slowdown.52
Neutral
| Breakdown | Jan 2026 | Jan 2025 | Jan 2024 | Jan 2023 | Jan 2022 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 41.69B | 41.53B | 43.45B | 46.30B | 51.76B |
| Gross Profit | 9.37B | 9.38B | 9.60B | 9.91B | 11.64B |
| EBITDA | 2.28B | 2.21B | 2.60B | 2.74B | 3.92B |
| Net Income | 1.07B | 927.00M | 1.24B | 1.42B | 2.45B |
Balance Sheet | |||||
| Total Assets | 14.67B | 14.78B | 14.97B | 15.80B | 17.50B |
| Cash, Cash Equivalents and Short-Term Investments | 1.74B | 1.58B | 1.45B | 1.87B | 2.94B |
| Total Debt | 4.13B | 4.05B | 3.98B | 3.98B | 3.94B |
| Total Liabilities | 11.71B | 11.97B | 11.91B | 13.01B | 14.48B |
| Stockholders Equity | 2.96B | 2.81B | 3.05B | 2.79B | 3.02B |
Cash Flow | |||||
| Free Cash Flow | 1.26B | 1.39B | 675.00M | 894.00M | 2.52B |
| Operating Cash Flow | 1.96B | 2.10B | 1.47B | 1.82B | 3.25B |
| Investing Cash Flow | -730.00M | -704.00M | -781.00M | -962.00M | -1.37B |
| Financing Cash Flow | -1.08B | -1.31B | -1.14B | -1.81B | -4.30B |
Best Buy Co Technical Analysis
Negative
62.62
Price Trends
66.10
Negative
70.59
Negative
70.49
Negative
Market Momentum
-0.89
Positive
41.82
Neutral
12.19
Positive
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 62.62 is below the 20-day moving average (MA) of 64.11, below the 50-day MA of 66.10, and below the 200-day MA of 70.49, indicating a bearish trend. The MACD of -0.89 indicates Positive momentum. The RSI at 41.82 is Neutral, neither overbought nor oversold. The STOCH value of 12.19 is Positive, 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 32 risk factors in its most recent earnings report. Best Buy Co reported the most risks in the "Finance & Corporate" 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
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $21.75B | 24.20 | 51.88% | 1.37% | 5.10% | 7.59% | |
63 Neutral | $41.94B | 19.34 | 42.68% | 1.38% | 4.89% | 17.30% | |
63 Neutral | $10.47B | 57.58 | 55.17% | ― | 9.80% | -46.84% | |
62 Neutral | $10.57B | 32.36 | 8.27% | ― | -12.13% | 426.82% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
55 Neutral | $5.29B | 33.41 | -15.36% | ― | 1.98% | -20.98% | |
51 Neutral | $13.12B | 12.85 | 38.54% | 5.46% | -0.95% | -48.28% |
* Consumer Cyclical Sector Average
BBY
Best Buy Co
62.62
-7.41
-10.57%
EBAY
eBay
93.61
27.34
41.26%
GME
GameStop
23.59
-0.12
-0.51%
WSM
Williams-Sonoma
182.17
18.44
11.26%
ETSY
Etsy
54.92
10.20
22.81%
CHWY
Chewy
25.22
-7.03
-21.80%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.