Best Buy Earnings Report Prompts Stock Price Surge

Best Buy Earnings Report Prompts Stock Price Surge

Electronics retailer mainstay Best Buy (NYSE:BBY) rolled out its earnings report today, and with it brought a 3.8% jump in premarket trading. It's also held onto those gains going into this morning's trading, adding some further momentum on besides. The company turned in both earnings and revenue beats, and even raised its full-year forecast in light of current conditions and a holiday shopping season still to come. Despite the recent gains, the picture provided by financial analyst consensus remains mired in caution, as it's been since December 2020.

Best Buy Earnings Report Proves a Blockbuster

The numbers Best Buy delivered proved sound in every sense. The company posted earnings per share of $2.23 on an adjusted basis, against a Refinitiv estimate of $1.39.

Revenue, meanwhile, posted a beat on multiple fronts. The $11.64 billion turned in not only beat estimates of $10.44 billion from Refinitiv, but also handily beat the $8.56 billion seen at the same time last year. Reports note that this represents the third consecutive quarter of sales growth measurable in double-digit figures.

Even sales growth represented a beat in its own right; a StreetAccount consensus was looking for online sales and sales from stores open at least 14 months to come in at 22.4% growth. Best Buy instead posted 37.2% growth from such operations.

Best Buy pointed to several different categories in explaining its growth; the company noted gains in sales across all categories, though it noted the largest gains came from home-related goods, particularly home theater and appliances. Computers also made major gains. This represents the first quarter where Best Buy is making direct year-to-year comparisons against the pandemic, when shoppers began to stock up on home electronics, allowing them to do at home what they used to leave the house to do. Best Buy's shift to curbside pickup-only in the year-ago quarter, meanwhile, temporarily hurt sales as shoppers could no longer enter stores.

Best Buy has spent much of the last year modifying its stores, and the way it does business in general. Reports noted that the company has already laid off around 5,000 employees, and is currently working on testing new, smaller store formats. Lease renewals are also potentially on the chopping block as the company considers which stores it may no longer need.

Company CEO Corie Barry noted that customer demand for technology products in the previous quarter was “...extraordinarily high.” Barry further noted that much of this demand was attributed to an increased desire—and in some cases obligation—to do things from home, from working to cooking to entertaining and beyond. The addition of government stimulus checks also helped on this front as customers could more readily purchase the technology in question.

What Do Financial Analysts Think About BBY Stock?

While Best Buy stock is enjoying a surge in popularity among investors, and the Best Buy earnings date brought plenty of reason for that surge with it, the word among financial analysts is much more cautious. Our latest research shows that Best Buy carries a consensus rating of “hold” and has carried such since December 2020.

A year ago, the company had 11 “buy” ratings, nine “hold” and one “sell” rating to its credit. Six months ago, meanwhile, that shifted to 13 “buy”, 10 “hold” and one sell. Today, however, we stand at 11 “buy” ratings, seven “hold” and three “sell”. This level of “sell” sentiment hasn't been seen since before December 2019.

Price targets feature a fairly substantial range; the current average is $114.72, with a high of $135 and a low of $86. Given that Best Buy stock currently trades at $120.64 as of this writing, some downside potential is clearly in play.

Recent movement for the company has generally been positive if light; three days ago, Morgan Stanley raised its price target from $110 to $115, though it maintained its “equal weight” rating. Earlier in May, Wedbush put a “neutral” rating on the company but lowered the price target from $135 to $125. The last analyst move seen before that was back in March, when Citigroup started coverage with a “sell” rating and an $86 price target.


Companies in This Article:

CompanyCurrent PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Best Buy (BBY)$107.63-1.7%2.60%12.59Buy$120.56