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Best Buy Co Inc BBY

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Stock XNYS Rating as of
$74.00 −0.69 (0.92%)
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Company Report

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Best Buy Earnings: Weak Discretionary Spending Pinches Beleaguered Retailer's Results; Shares Cheap

Sean Dunlop

Narrow-moat Best Buy posted another challenging quarter of results, missing our top- and bottom-line estimates and pulling down guidance for the important holiday season as spending remains soft in the consumer electronics category. After digesting results, we plan to lower our $95 fair value estimate by a low-single-digit percentage, and we continue to view a recovery in category demand in the second half of 2024 as our base case scenario. Shares look cheap, trading at nearly a 30% discount to our revised valuation.

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Price vs Fair Value

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BBY is trading at a 20% discount.
Price
$74.00
Fair Value
$54.00
Uncertainty
High
1-Star Price
$557.90
5-Star Price
$12.10
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

With digital sales volumes projected to equilibrate at roughly double pre-COVID-19 levels, Best Buy should better compete for online volumes that it historically ceded to online competitors.

Bears

Service and accessory attach rates remain higher in in-store channels, posing a modest headwind as the digital mix remains permanently higher.

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News

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Trading Information

Previous Close Price
$74.69
Day Range
$73.50–74.40
52-Week Range
$62.30–90.27
Bid/Ask
$73.59 / $74.42
Market Cap
$15.94 Bil
Volume/Avg
2.8 Mil / 2.5 Mil

Key Statistics

Price/Earnings (Normalized)
11.80
Price/Sales
0.37
Dividend Yield
4.92%
Dividend Yield (Forward)
4.97%
Total Yield
10.05%

Company Profile

With $46.3 billion in consolidated fiscal 2023 sales, Best Buy is the largest pure-play consumer electronics retailer in the U.S., boasting roughly 8.5% share of the U.S. market and north of 35% share of offline sales, per our calculations, CTA, and Euromonitor data. The firm generates the bulk of its sales in-store, with mobile phones and tablets, computers, and appliances representing its three largest categories. Recent investments in e-commerce fulfillment, accelerated by the COVID-19 pandemic, have seen the U.S. e-commerce channel roughly double from prepandemic levels, with management estimating that it will represent a mid-30% proportion of sales moving forward.
Sector
Consumer Cyclical
Industry
Specialty Retail
Stock Style Box
Mid Value
Total Number of Employees
90,000
Website
https://www.investors.bestbuy.com

Competitors

Valuation

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Metric
BBY
AAPL
WMT
Price/Earnings (Normalized)
 11.8031.6023.78
Price/Book Value
 5.6948.405.28
Price/Sales
 0.377.980.66
Price/Cash Flow
 6.5926.1113.94
Price/Earnings
BBY
AAPL
WMT

Financial Strength

Metric
BBY
AAPL
WMT
Quick Ratio
 0.150.840.20
Current Ratio
 0.990.990.85
Interest Coverage
 33.9628.969.75
Quick Ratio
BBY
AAPL
WMT

Profitability

Metric
BBY
AAPL
WMT
Return on Assets (Normalized)
 8.97%30.90%6.56%
Return on Equity (Normalized)
 50.24%181.92%21.56%
Return on Invested Capital (Normalized)
 21.47%62.35%12.12%
Return on Assets
BBY
AAPL
WMT

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